The Blackstone Group is acquiring a majority stake in Emdeon Inc., via a $3 billion deal that will take private the healthcare revenue and payment management company. Blackstone is investing out of its Blackstone Capital Partners VI L.P. Existing shareholder Hellman & Friedman will maintain “a significant minority equity interest” in Emdeon, the company said Thursday. Along with Hellman & Friedman, buyout shop General Atlantic is currently one of the company’s largest shareholders.
Emdeon Inc. (NYSE: EM), a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced that it has entered into a definitive merger agreement with Blackstone Capital Partners VI L.P. under which this Blackstone fund will acquire a controlling interest in Emdeon in a transaction valued at approximately $3 billion that will result in Emdeon becoming a private company. Hellman & Friedman will maintain a significant minority equity interest in Emdeon.
Under the terms of the merger agreement, holders of Emdeon common stock will receive $19.00 per share in cash. Emdeon’s Board of Directors has unanimously approved the merger agreement and is recommending that Emdeon’s stockholders adopt the merger agreement. General Atlantic and Hellman & Friedman have agreed to vote shares owned by them representing, in the aggregate, approximately 70% of the Company’s outstanding shares, in favor of the transaction.
“This transaction provides for a great return for our investors,” said George Lazenby, chief executive officer for Emdeon. “We are excited about the opportunity to move forward with two excellent investors in Blackstone and Hellman & Friedman. They each have an in-depth understanding of our business and industry, and will be tremendous partners as we continue to pursue our strategy of making healthcare efficient. We are looking forward to building upon our leadership position in healthcare information technology and services, made possible by the continued support of our customers and the dedication and commitment of our employees.”
Lazenby continued, “We also wish to acknowledge the tremendous contributions of global growth investor General Atlantic in our development and thank them for the leadership and support they have provided since becoming our majority owner in 2006.”
“We are thrilled to be investing in such a high quality company,” said Neil P. Simpkins, senior managing director of Blackstone. “Blackstone looks forward to supporting Emdeon and its experienced management team, in continuing to provide innovative products and services to the healthcare industry.”
“We are excited about the proposed transaction and the value it brings to Emdeon stockholders,” said Allen Thorpe, managing director for Hellman & Friedman. “We believe that Emdeon has a great healthcare IT franchise and we look forward to the next chapter of our working relationship.”
The transaction is subject to customary closing conditions, including approval by Emdeon’s stockholders and clearance under the Hart-Scott-Rodino Act, and is currently expected to be completed in the second half of 2011. Following completion of the transaction, Emdeon will become a privately held company and its Class A common stock will no longer be traded on the New York Stock Exchange.
Morgan Stanley acted as lead financial advisor and UBS Investment Bank acted as co-financial advisor to Emdeon’s Board of Directors. Paul Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Emdeon. King & Spalding LLP acted as legal advisor to Emdeon’s outside directors. Blackstone Advisory Partners LP, Banc of America Merrill Lynch, Barclays Capital and Citigroup acted as financial advisors and Ropes & Gray LLP acted as legal advisors to Blackstone.
Blackstone has secured committed financing from Banc of America Merrill Lynch, Barclays Capital and Citigroup. These funds, in addition to equity financing from Blackstone, will finance the cash consideration to be paid to Emdeon’s stockholders.
Quarterly Results Announcement
Emdeon noted that, with the proposed transaction, it will not host a conference call to discuss financial results for the second quarter of 2011. The Company expects to issue its earnings release and file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 on or about August 8, 2011.
Emdeon is a leading provider of revenue and payment cycle management solutions, connecting payers, providers and patients in the U.S. healthcare system. Emdeon’s product and service offerings integrate and automate key business and administrative functions of its payer and provider customers throughout the patient encounter. Through the use of Emdeon’s comprehensive suite of products and services, which are designed to easily integrate with existing technology infrastructures, customers are able to improve efficiency, reduce costs, increase cash flow and more efficiently manage the complex revenue and payment cycle process. For more information, visit www.emdeon.com.
Blackstone (NYSE: BX) is one of the world’s leading investment and advisory firms. Blackstone seeks to create positive economic impact and long-term value for its investors, the companies they invest in, the companies they advise and the broader global economy. Blackstone does this through the commitment of their extraordinary people and flexible capital. Their alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.
About Hellman & Friedman LLC
Hellman & Friedman LLC is a leading private equity investment firm with offices in San Francisco, New York and London. Since its founding in 1984, Hellman & Friedman has raised and, through its affiliated funds, managed over $25 billion of committed capital. The Firm focuses on investing in superior business franchises and serving as a value-added partner to management in select industries including internet & digital media, software, business & marketing services, financial services, insurance, media, healthcare and energy & industrials.