Keane, a Boston-based computer software services company, has concluded the $2.5 million purchase of a financial information system after a competing bid by the system's developer collapsed.
Keane was interested in the system's client base, while its developer apparently wanted to save his creation.
Keane had made its offer in March to buy the product line, called InfoStat, from Houston-based Community Health Computing Corp., which dropped it in October 1994 as part of an unsuccessful attempt to avoid a slide into Chapter 11 bankruptcy reorganization.
The $2.5 million offer was aimed at gaining access to the 50 customers of the information system, and converting them to Keane's own financial and administrative system, called Threshold. In the interim, Keane would continue to support the InfoStat users. Since CHC dropped the line, they have been in limbo (March 20, p. 37).
But when the agreement was brought to bankruptcy court for approval, CHC's principal creditors accepted a competing bid from Robert Flippin, one of InfoStat's co-founders in the early 1980s. CHC bought the company in 1990.
Keane made two counteroffers but bowed out when the bidding reached $3.5 million, which "went beyond what we thought was reasonable," said Raymond Paris, vice president and general manager of Keane's healthcare services division.
Flippin and his financial backer, a California-based mortgage banker named Wade Hanson, testified at the April 10 hearing that they were capable of producing the purchase price in cash, said Greg Smith, CHC's vice president and chief financial officer. But they couldn't raise it in the week's time they were given to close the deal, Smith said.
Keane then concluded its previous deal at the original $2.5 million purchase price, wiring the money to the committee of creditors on April 20, said Keane spokesman Larry Vale.
"I was sitting on a release that said we were outbid, but I didn't want to issue that until the fat lady had sung," Vale said. "We had our suspicions that this thing wasn't over."
Flippin declined to comment on his involvement in the proceedings. But Paris said the competitor's apparent message was that he didn't want the product phased out of the market. "His total push was, he wanted to grow the business and retain the product," Paris said. "He had been an original founder and didn't want the product to be (killed)."
Smith said about a dozen prospective buyers had surfaced since CHC discontinued InfoStat. CHC's strategy was to narrow the list to one, sign a contract, establish bidding procedures in bankruptcy court and allow others to contest Keane's bid if they wanted, he said.
The bankruptcy court last week confirmed CHC's reorganization plan, which calls for it to be acquired by Adac Laboratories, a Milpitas, Calif., radiology information systems vendor. Before it can re-emerge from its Dec. 7, 1994, filing for bankruptcy protection, CHC must clear federal antitrust scrutiny, Smith said.