Eclipsys Corp.'s unsolicited offer to buy Shared Medical Systems for $2 billion in stock was immediately rebuffed late last week by SMS, setting the stage for a battle over the industry's oldest information systems and services company.
The proposal to pay $67 per share represented a 75% premium over SMS' closing price of $38.25 on March 2. By early afternoon March 3, the share price had risen more than $20 to $59.75.
Malvern, Pa.-based SMS dwarfs Eclipsys in sales and service volume, recording $1.2 billion in revenue in 1999 compared with $249 million for Eclipsys. Delray Beach, Fla.-based Eclipsys has been coming on strong, however, posting increases of 37% in revenue and 75% in earnings per share last year.
In a statement, SMS said it "remains uninterested" in a merger with Eclipsys, characterizing the offer as "the most recent in a series of efforts by Harvey Wilson, chairman of Eclipsys, to cause SMS, in effect, to acquire his company, under circumstances in which he assumes management control."
Wilson co-founded SMS in 1969 and served as its president. He left the company in 1984 but returned to the healthcare computer industry in 1996. Most of the top management at Eclipsys once held positions at SMS.