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News > Deals
Eclipsys bid turns hostile
March 6, 2000: 7:05 p.m. ET

Company takes aggressive steps in unsolicited bid for Shared Medical
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NEW YORK (CNNfn) - Healthcare computer services company Eclipsys Corp., a provider of software for healthcare companies, on Monday stepped up its $2 billion bid to take over its much larger rival, Shared Medical Corp., initiating two moves to control the company's board.
     Delray Beach, Fla.-based Eclipsys said on Monday it had nominated four candidates to replace a majority of Shared Medical's current board, and has sued the company to nullify a provision that would make the takeover more difficult.
      The two moves come after Shared Medical  (SMS: Research, Estimates) on Friday rejected Eclipsys'  (ECLP: Research, Estimates) $67-a-share for Malvern, Pa.-based Shared, whose fiscal 1999 revenues, at about $900 million, are more than four times that of its suitor.
      The bid's hostile nature bubbled up on Monday, when Shared Medical said it plans to explore strategic alternatives, despite Eclipses overtures. In a statement, Shared Medical chief executive said the company had hired Goldman, Sachs & Co. as advisers, and labeled its own stock "extremely undervalued."
    
Wall Street smiles on potential deal

      Wall Street analysts, who insist a sale would be good for Shared Medical, were pleased about the offer.
      "There's going to be a change of control at SMS, it's been a clearly underutilized asset for the past number of years, and I think Eclipsys makes good strategic sense," said Benjamin Rooks, an analyst with CIBC World Markets. "In the past, the management of SMS have not been sellers, but at this point it seems clear that they have to do something."
     Since Eclipsys announced its $2 billion unsolicited bid for the No. 2 healthcare software and computer systems provider on March 2, Wall Street has been optimistic about the deal.
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     Shared Medical's stock has shot up 63 percent since the bid was announced last week. The shares ended down 1-3/4 at 61-3/4 on the New York Stock Exchange.
    Eclipsys shares meanwhile closed down 2 on the Nasdaq stock market at 24-7/8.
    Eclipsys said it submitted its proposal to elect four new independent directors to Shared Medical's seven-member board after Shared Medical rejected its bid on Friday.
      Eclipsys' lawsuit seeks to get rid of any structural impediments to its takeover plan. Specifically, it wants to get rid of a provision in Shared Medical's corporate bylaws that would allow directors to vote on any key issues involving change of ownership, even if they were ousted.
     If it succeeds in eliminating this "dead hand" provision, it would then be able to invalidate a Shared Medical shareholder rights plan that is designed to deter any unwanted takeover attempts.
     Eclipsys alleges the continuing director, or "dead hand," provision is illegal in Delaware.
      Eclipsys said it expects that the merger would add to earnings at both companies by creating the world's leading provider of business solutions for the healthcare industry and enhancing growth prospects. The deal would provide cost savings of more than $100 million through elimination of operational, service and product redundancies, Eclipsys said.
      "What Eclipsys is after is a very strong customer base with a very solid remote processing capability in the form of Shared Medical," said Christopher Caton, first vice president with Robert W. Baird & Co.
      "If they can leverage that shareholder base, to expand a clinical and e-health initiative, you're talking about some very significant internal growth potential for the next three to five years," he said. Back to top
    -- from staff and wire reports

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.