Elliot Management bids for Athenahealth

Hedge fund Elliot Management Corp. has made an unsolicited bid for Athenahealth Inc. (ATHN) of $160 per share, or an estimated total value of over $6 billion, to take the company private. The price represents a premium of around 27% to Athena’s share price at Friday market close. Athena’s shares soared more than 20% after news of the bid was released.

Elliot has held a 9% stake in Athenahealth and has been trying to push for strategic changes at the company but said it was dissatisfied with Athena’s implementation of its plans as well as the overall performance. The changes included the appointment of a President to run operations. Elliot added that as long as Athena remained a public company, it would not be possible for it to make the necessary changes.

Elliot said Athena has missed out in terms of outlook goals, product execution and creation of shareholder value. The fund also pointed out the lack of stability in the company’s leadership team. Athenahealth, which is led by Jonathan Bush, brought in former GE chief Jeff Immelt to take up the role of Chairman earlier this year, as part of a plan to separate the roles of CEO and Chairman.

Last year, Athena had rejected Elliot’s suggestion of going private. This time, however, Athena confirmed that it received an offer from Elliot and said its board would review it. The company has sought the advice of investment bank Lazard Ltd. and law firm Weil, Gotshal & Manges LLP.

Some analysts believe the offer price is low, given Athena’s margins and revenue profile while others feel the offer is good enough to provide value to shareholders.