The Premier hospital alliance will become the largest shareholder in Medibuy.com, with a 44% stake worth an estimated $550 million, after the private company files its initial public offering.
San Diego-based Premier would receive 50 million shares in Medibuy.com as compensation for the sale of Premier Health Exchange, the alliance's fledgling e-commerce unit.
In another part of the deal, Medibuy.com would receive $159 million in payments from Premier over six years for infrastructure development and online transactions made by members of the hospital alliance.
Medibuy.com also would earn fees for processing transactions under Premier purchasing contracts in excess of predetermined minimum purchasing volumes, the filing said. Additionally, Medibuy.com would reap fees on the sale of all noncontracted products and services sold over the service to Premier members. A portion of those fees would be paid as a sales commission to Premier Purchasing Partners, the alliance's purchasing group.
The deal was announced early
this month and detailed in a securities filing last week (March 13, p. 12). Medibuy.com plans to sell 13 million shares to the public at a tentative price of about $11 per share.
The revised registration statement by Medibuy.com confirms that Premier Chief Executive Officer Richard Norling, 54, would become chairman of Medibuy.com, replacing Dennis Murphy, 41, who would remain on the board and continue as president and CEO of the company.
Norling would not benefit personally from the deal, Premier spokesman Pat Poston said.
Under terms of the agreement Premier, which has 1,800 hospital members, has the right to name four other directors to the Medibuy.com board.
Any stocks or options granted to those individuals would be transferred to Premier, Poston said, under a policy that requires any alliance representative who receives compensation for serving on an external company board to turn it over to Premier.
Poston also clarified Norling's service on the board of Express Scripts, a St. Louis-based pharmacy benefits manager. Norling, who joined Premier in 1997, was named a director of Express Scripts in 1992. Prior to his tenure with Premier, Norling received options for 48,000 shares of Express Scripts under a 1992 compensation plan for directors.
Poston said that Norling recuses himself from any discussions and decisions regarding Premier and Express Scripts.
Several other details emerged in the revised registration statement.
Premier invested $47.7 million,a figure that was not previously disclosed,in Premier Health Exchange. Medibuy.com will pay Premier $20 million during 10 years for marketing and support services.