Monday, April 26, 2010

More 'Splaining From The PACSMan

Dalai's note:  Mike Cannavo, the One and Only PACSMan, submits this follow-up piece to the discussion on the Merge acquisition.  As Mike notes, I was really hoping to have all this behind us, and I was looking forward to getting on with life, hopefully with Merge supporting AMICAS PACS in the manner to which we customers have become accustomed.  Alas, so far, not so good.   While I am convinced that Merge will continue the AMICAS PACS, we have to keep all of the following in mind.

Take it away, Mike!

Five p.m. Friday came and went and nary a word from the investment community regarding Merge’s pending purchase of AMICAS. The Dalai and I started trading e-mail around noon- back and forth all day- “You heard anything?” “Nope.” Back and forth until 5 o’clock came and went the e-mails went like that. Then the weekend came and went and today at 11:30 URC (7:26 am) I get the email that in the week since the extension all Merge was able to sell just under 2% additional stock (1.83% specifically), going from 89.8% to 91.63%. That comes out to about 678,500 shares. By comparison at the end of Thursday, April 15, 2010, a total of 33,297,311 shares of AMICAS common stock, representing approximately 89.8% of the outstanding shares of AMICAS common stock, had been validly tendered. If you look at how much Merge was able to sell it’s almost as much as Thoma Bravo offered- without the aggravation of waiting to see if the sale will indeed come through in the end.

Truthfully both the Dalai and I though the deal would have been completed by now with a marching band and floats announcing the completion of the sale and the Dalai and my own burning effigies leading the parade. And- sit down when you read this- we both truthfully hoped it would have happened too, although honestly more for AMICAS sake than for Merges. But alas, twas not to be- and I do so love a parade too. When I was growing up ever Saturday before the football game the high school band used to march from the high school, through the center of town, down Maple Avenue and onto the football fields- but my kids say I’ve been looking at too many Norman Rockwell paintings and that never happened. At least you can say my kids inherited my cynicism honestly. It did happen by the way….and I do so love a parade,…

So- questions abound.
1) What ever happened to the $200M bridge loan that Morgan Stanley promised? Instead you have Merge selling $240M in stock to purchase AMICAS ($40M followed by another $200M). If Morgan Stanley read the Dalai’s blog and decided to hold off we at least want the Hamm and Swiss on rye they owe us- no mayo please- and make the Dalai’s kosher ham too please- extra pickles.
2) Merge missed one deadline then another, yet managed to raise <2% in the last week’s extension. They are still over 8% short and have less than three days to raise the outstanding capital. Short of Allscripts/Misys coming in on a white horse and floating them the $16M they are short, what options are left?
3) How long will AMICAS continue to extend the deadlines? This reminds me so much of the gal in high school who wants so much to go out with the quarterback but feels she is out of his league- and just when she reaches the point of saying she’ll do anything just to be with him she realizes what a real jerk he really is…
4) What happens to the money raised by Merge to buy AMICAS if the deal doesn’t go through? Can they take the $18M in penalties out of the monies raised? Maybe not from the $200M but from the $40M also raised?
5) Why was the return on the $200M so high? Most investors expected the return to be 10-10.5% or so, not 11.75%. As one person on the Yahoo finance board for Merge said “Don’t know if it’s an issue with the market or Merge. Guess we’ll get an explanation at earnings time”. That is IF there is an earnings time…
6) Just who is “Project Ready Corp” and why isn’t Merge buying AMICAS directly instead of buying through a separate company that was just established in Delaware a little over a month ago? Interesting.. Check it out. Yes, they are a wholly owned subsidiary but…..who are the officers? Assets? Liabilities? etc.
7) How much does StockTrans, Inc. get paid to act in their role as the “rights agent” ?
8) Saying adios to Thoma Bravo costs both companies $8.6M, half of which was paid for by Merge. Where did that money come from? Is it tacked on to the total purchase price?
9) Merge stock closed Friday at $2.75 and opened today at $2.53. Can you say spooked- although it did rebound quickly back into the $2.65 range with over 130K shares traded in the first hour alone…
10) Where does AMICAS go from here? Is the Bravo deal still viable?
11) What happens to Merge as a company? Do we find their stock at Dollar Tree again? What happens to the Merge leadership? After all they are all heavy hitters in the investment community. Even if they pull this deal off, it’s tarnished with two extensions required just to get above 91%.

There is one line in the latest release that bothers me to no end. “Merger Sub intends to acquire all of the remaining outstanding AMICAS stock as soon as practicable by means of a short-form merger and without the need for an AMICAS shareholder meeting.”

“…as soon as is practicable…”? I think they mean as soon as practical- good proofreaders are so hard to find- but alas I digress. I thought the purpose of a deadline was to be able to make a decision by then. This reads “we’ll get to it as soon as we can….and hopefully we can”.

“…without the need for an AMICAS shareholder meeting.” By the time the AMICAS stockholders held their last meeting (which was postponed just long enough for AMICAS management to decide to take the Merge deal without stockholder input) they were rendered impotent and had no say in the deal. “We know what is right for you- now shut up and eat your broccoli…”

I think the AMICAS stockholders need to have an emergency meeting ASAP and use those three little initials my kids use often without actually saying the words, lest they lose a host of privileges…Those initials are WTF. Ask a lot of pointed questions- I’m sure I’ll have more as the day goes on just as the Dalai does- but WTF pretty much summarizes all my questions to both Merge and AMICAS leadership about this deal and the constant extensions trying to raise the bucks.

So, splain me some more Ricky- and WTF???!!

No comments :