Athenahealth shareholders vote in favor of $5.7 billion purchase

Athenahealth shareholders voted overwhelmingly in favor of the electronic health record provider's $5.7 billion purchase by two private equity firms Thursday, in addition to generous stock awards for its executives.

Ninety-nine percent of the voting shares were cast in favor of the deal, or 28 million shares out of 28.2 million voting shares present for Thursday's vote. The owners of roughly 175,000 shares voted against the deal, while another 33,000 abstained.

Support wasn't as strong for the stock award and golden parachute compensation packages Athenahealth's executive officers and directors will receive once the deal closes. Only about three-quarters of voting shares were cast in favor of the package, or 21.5 million for, 6.6 million against and 112,000 abstaining. The compensation vote was non-binding, advisory vote.

The 28.2 million shares represented in Thursday's vote represented only 68% of the 41 million shares whose owners were eligible to vote.

The deal has met all necessary regulatory approvals, so closing is likely imminent. Once that takes place, Athenahealth will go from being a publicly traded company to a private one.

Veritas Capital and Elliott Management's Evergreen Coast Capital announced in November plans to buy Athenahealth for $5.7 billion and combine it with the former GE Healthcare company Virence Health Technologies. The deal is expected to close in the first quarter, with the firms paying through a combination of cash-on-hand, as well as debt and equity financing.

Upon closing, Athenahealth shareholders will receive $135 in cash per share of common stock, representing a premium of about 12% over the company's closing price on the last day of trading prior to the pending deal's announcement.

The groups said they expect the resulting business will be a leading healthcare information technology company with an extensive provider network and solutions to help them thrive in an increasingly complex environment. The company will be led by Virence CEO Bob Segert and an executive team comprised of leadership from both companies.

The proposed deal hit a snag in December and early January when three shareholders filed lawsuits that said Athenahealth's original proxy filing to shareholders was misleading and left out material information. In an updated proxy filing on Jan. 28, Athenahealth announced that all three plaintiffs had voluntarily dismissed their lawsuits.

One of the lawsuits, Hamilton v. Athenahealth, took issue with the more than $26 million in stock awards Athenahealth's executives and board members will receive once the deal closes, arguing the deal will "create a windfall for Athenahealth's executive officers that is unavailable to the comment stockholders." The complaint also cited the golden parachutes proposal, which is worth a combined $20.3 million. That lawsuit also argued that the price of $135 per share does not adequately compensate the company's shareholders.

"In the end, Elliott got what it wanted," the complaint stated. "Athenahealth is going private, but Elliott is paying less than the company is worth. If history is any indication, Elliott will sell Athenahealth in a few years for a premium. Elliott will profit; the other Athenahealth shareholders will not."