Merge-ing with AMICAS?

Mike Cannavo, the One and Only PACSMan, broke the news to me.  "Say it ain't so, Joe!" he began, then presented the following press release:

MILWAUKEE--(BUSINESS WIRE)-- Merge Healthcare Incorporated (NASDAQ: MRGE) today announced its pending $6.05 cash per share offer for AMICAS, Inc. (NASDAQ: AMCS). Merge’s proposal, for an aggregate of $248 million, represents a 13% premium to the previously-announced offer for AMICAS from a newly-formed affiliate of Thoma Bravo, LLC for $5.35 cash per share. Merge’s current offer follows its offer of $6.00 cash per share that was made during the “go-shop” period contemplated by AMICAS’ merger agreement with Thoma Bravo. Last week, Merge intervened in Massachusetts litigation challenging the adequacy of AMICAS’ disclosures relating to this transaction, as well as the process by which its proposals have been considered by the AMICAS Board of Directors.

Merge has received a signed bridge financing commitment from Morgan Stanley to provide $200 million of debt financing, and is subject only to standard and customary conditions. Based on that commitment and available cash, including $40 million of pre-funded equity investments from mezzanine investors, Merge has proposed to commence a $6.05 cash per share tender offer for all AMICAS shares and to close the acquisition as quickly as possible thereafter.

I nearly aspirated when I read this. MERGE? Buying AMICAS? Give me a break! The folks that brought you eFilm, one of the most ubiquitous but primitive clients out there are mounting a hostile takeover of AMICAS? With borrowed money? MERGE? The company that bought eMed and Cedara, and didn't ever do much with either product line? MERGE? The company that was at death's door not so long ago? MERGE? The folks whose CD's have to be taken out only AFTER one closes the eFilm program, or your computer must be rebooted to clear their tracks? MERGE? The company that utilized Indian radiologists to provide prelims? MERGE????????????

AMICAS seems to agree with me.  In their own press release, the Merge offer was termed "illusory and risky".  PLEASE read the dozen plus problems AMICAS has with being purchased by Merge.  Did you know that this represents the SIXTH attempt by Merge to buy AMICAS?  That should tell us something.

"Merge's highly-conditional proposal is (i) dependent on third-party financing, (ii) subject to a "reverse break" fee, which essentially gives Merge a $10 million "option" to buy Amicas; (iii) subject to a number of additional conditions, the satisfaction of which are within Merge's control, and (iv) has been characterized as Merge's "best and final" proposal," according to the statement. "Given the highly-conditional nature of Merge's most recent proposal, the Amicas board of directors believes that the Merge proposal is illusory and risky to Amicas stockholders."



The Amicas board noted that the cash for the Thoma Bravo buyout "is fully financed and guaranteed by Thoma Bravo and other first-tier private equity funds and is not dependent on unguaranteed, third-party financing" and that the equity firm was set to close the deal as planned Feb. 19. The board said it believes "the Thoma Bravo Merger provides Amicas stockholders with immediate and certain cash value."

I know that AMICAS stockholders (I am NOT one of them, by the way), as well as those who dabble in the financial message boards such as Yahoo and Google look at this blog periodically.  I hope you will look today.  PLEASE do not be swayed by this marginally-better offer.  I have spoken with some of the big wigs at AMICAS, who assure me that Thoma Bravo, like Warren Buffet's Berkshire Hathaway, allows the companies they purchase to go on doing what they were doing.  They don't go in and "fix" something that wasn't broken, breaking it in the process, like some larGE companies I can cite.  I cannot prove it or document it, of course, but if Merge buys AMICAS, the latter company and its product line will suffer.  And if AMICAS suffers, my PATIENTS suffer.  This mustn't happen. 

So, shareholders...PLEASE vote for the Thoma Bravo offer.  Please.  If you go to the Dark Side, you will destroy a fine company with a fine product, and you could conceivably impair the ability of radiologists like me to deliver patient care.  That is my only motivation; I have no financial stake in this.  Please do the right thing.

Thank you.