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Allscripts To Buy Eclipsys For $1.3 Billion

The stock deal positions Allscripts to accelerate electronic health record adoption among hospitals, physician practices, and other health delivery organizations.

Electronic health record vendor Allscripts Wednesday announced it will buy Eclipsys in an all-stock transaction valued at approximately $1.3 billion. Under the terms of the agreement, Eclipsys stockholders will receive 1.2 shares of Allscripts for each share of Eclipsys, equating to a 19% increase from Tuesday's closing price.

Allscripts, which offers clinical software, information, and connectivity solutions for physicians, and Eclipsys, a provider of solutions and services to hospitals and clinicians, said the merger will enable both companies' clients to more effectively access the approximately $30 billion in federal American Recovery and Reinvestment Act funding for hospital and physician who adopt EHRs.

Additionally, the combination of Allscripts and Eclipsys solutions will further establish Allscripts as a leader in driving "meaningful use," the criteria that physicians and hospitals must satisfy in order to qualify for federal funding under ARRA.

Driven in large part by the ARRA incentives, which begin in 2011, EHR adoption by physician practices is projected to grow. The government's stated goal is to provide every American with an EHR by 2014.

"We are at the beginning of what we believe will be the single fastest transformation of any industry in U.S. history, and the combination of the Allscripts Electronic Health Record portfolio in the physician office and leadership in the post-acute care market, with Eclipsys' market-leading hospital enterprise solution creates the one company uniquely positioned to execute on this significant opportunity," Glen Tullman, Allscripts CEO, said in a statement.

Tullman, who will remain CEO after the close of the merger, which is expected around year's end, said his company's vision is to help improve the quality and cost of care by leveraging technology to create solutions for healthcare delivery organizations.

The merger agreement has been approved by the boards of directors of both Allscripts and Eclipsys and is subject to stockholder approvals and other customary closing conditions and regulatory approvals. The ownership stake of Misys, currently Allscripts' majority stockholder, is expected to be reduced through share buyback and secondary offering. Allscripts anticipates over $100 million in cost savings over the first three full fiscal years after completion of the transaction.

The merger will give Allscripts a client base of over 180,000 U.S. physicians, 1,500 hospitals, and nearly 10,000 nursing homes, hospices, home care, and other post-acute organizations.

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