Thursday 7th February 2019
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Orion Health Group's founder and biggest shareholder, Ian McCrae, is leading a consortium to end the healthcare software developer's four-year stint as a public company.
Macrae personally holds almost 86 percent of the outstanding stock and has pooled that stake with other investors, including Compac founder Hamish Kennedy's 5.3 percent holding, to make the takeover a certainty by crossing the 90 percent threshold needed to mop-up the remaining shares.
The new entity - Grafton Health Holdings - will offer $1.224 a share, or $5.9 million, to buy the 7 percent it doesn't yet own and will enforce Takeovers Code provisions to do so.
The majority of Orion shareholders took up a share buyback in December to exit the firm after agreeing to a radical overhaul, in which its profitable Rhapsody business was sold to UK private equity for $205 million. The firm's holding in the population health management division was also diluted, leaving it with full ownership of the hospitals unit.
The offer price matches the buyback price, and Grafton will cover brokerage for those who accept. The shares rose 6 percent to $1.22 and have gained 27 percent the past year.
Orion independent directors Andrew Ferrier and Paul Shearer have set up a committee to respond to the takeover and will appoint an independent adviser to judge the offer. It recommends shareholders take no action until the board gives further guidance, including the report.
If successful, Grafton will delist Orion, but has no plans to make any material changes to the business or its capital structure.
"However, Grafton reserves the right to make changes in the future, depending on the business and economic environment and other relevant circumstances that arise after the offer," it said.
McCrae will remain the biggest shareholder of Grafton with about 87 percent. Kennedy will hold 8.1 percent and Orion director Michael Falconer's interests will own about 2.5 percent.
Orion had been profitable in private ownership but sought to accelerate global growth by raising funds from the public, while also changing to a subscription model from one-off perpetual licensing.
The Kiwi firm had hoped to profit from the previous US administration's Affordable Healthcare Act, known as Obamacare, which poured billions of federal government dollars into the wider US health sector. However, that flagship policy of Barack Obama's presidency was strongly opposed by the Republican Party and changes to the law forced many of Orion's customers to cancel orders when their own funding ran out.
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