Elliott Says Athenahealth Isn't Engaging in Takeover Talks

(Bloomberg) -- Elliott Management Corp. said it has heard nothing from Athenahealth Inc. or its board after proposing on May 7 to acquire the health technology company for $6.46 billion.

“Since that time, we have heard nothing from the company beyond its cursory, boilerplate press release,” Jesse Cohn, an Elliott partner and senior portfolio manager, said in a letter to Athenahealth’s board Monday. The New York hedge fund run by billionaire Paul Singer offer would take the company private for $160 a share.

“We are also aware that other parties have conveyed directly to the company interest in acquiring Athenahealth,” Cohn wrote. “Although we believe that our proposal is compelling and that we can move quickly to reach an agreement, we would be disappointed to learn that Athenahealth had refused to engage with any serious offers to buy the company.”

Athenahealth, whose online platform is used by doctors to manage their practices, said it’s reviewing Elliott’s proposal.

“The board will determine the course of action that it believes is in the best interest of the company and Athenahealth shareholders and will respond to Elliott Management’s proposal in due course,” it said in an email.

On the day the offer was made public, Athenhealth Chief Executive Officer Jonathan Bush sold some of his holdings under the provisions of a trading plan he put in place in October, according to a regulatory filing. The filing shows Bush sold 25,000 shares on May 7 at $155 a piece, for total proceeds of almost $3.9 million.

Fidelity Sell-Off

Fidelity Investments, which was Athenahealth largest holder, sold more than half of its holdings in the company as of April 30, prior to the Elliott proposal being made public, according to another filing.

Elliott said the lack of demonstrated interest in finding a buyer was indicative of what the fund has experienced since privately approaching Athenahealth about a takeover in November.

“Nothing about the way the company has behaved toward us gives us any reason to believe that any such engagement has occurred,” Cohn said in the letter “Several of these parties have confirmed to us that in the past, the company failed to engage with them, too.”

Athenahealth closed Friday at $150.96, about $9 below Elliott’s offer. Shares fell 0.5 percent to $150.19 at 12:56 p.m. Monday in New York, after rising as much as 1.7 percent.

Pushing for Changes

Elliott, which said it owns an 8.9 percent stake in the Watertown, Massachusetts-based company, has been agitating for changes for almost a year. In August, Athenahealth announced a plan to separate the role of chairman, chief executive officer and president. It’s also pursuing $100 million in cost cutting.

Under the terms of the plan, Bush, the company’s co-founder, was to remain on as CEO. Jeff Immelt, the former CEO of General Electric Co., was appointed chairman in January. The company has yet to appoint a president.

Elliott has a history of bidding on companies to draw out other potential buyers. It has also acquired companies itself, including most recently Gigamon Inc. in October for $1.5 billion. Gigamon makes networking traffic switches for data centers.

--With assistance from Emma Ockerman

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Drew Armstrong

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