Athenahealth's stock fell 11% in premarket trading Tuesday morning as the market reacted to news that Elliott Management's bid for the company was no longer on the table.
Elliott Management CEO Paul Singer was considering a bid at $160 per share, but a Monday night report from the New York Post suggested the executive was getting cold feet. Unfortunately for Athenahealth, Singer was one of just a few potential buyers, and his decision appeared to leave the company without a good backup option.
Instead, Athenahealth will delay, pushing the final bid deadline 10 days to Sept. 27. This should provide time for another suitor to come forward, the company hopes, or for Singer to reconsider. The Post indicated that Singer may be trying to get a lower price, beneath $150 per share, while CNBC reported Tuesday that the delay in the deadline might have been made to accommodate a new potential strategic bidder. Shares have since recovered a bit since that report.
Still, it seems the bidding process has not gone according to Athenahealth's plan. UnitedHealth and Cerner both dropped out of the bidding war earlier this month, leaving Elliott Management, partnering with Bain Capital, as the company's sole prospect.
Yet some observers think Elliott Management isn't even that interested in owning Athenahealth. Elliott has “little interest in actually buying the company, but hopes someone else does,” Greenlight Capital's David Einhorn wrote in a letter to investors last month. So its current status as lead bidder is somewhat precarious.
The bidding war for Athenahealth started in June after the company's longtime CEO Jonathan Bush stepped down. Bush, the cousin of former president George W. Bush, was CEO for 21 years before allegations came out that he had physically attacked his wife.
Athenahealth at first rejected offers to buy the company, but began exploring "strategic alternatives" after Bush left. Einhorn suggested that the manner of Bush's departure could explain some of the hesitation potential buyers are displaying.
“The prospective buyers might waver should they conclude that many of the best employees were personally loyal to the now deposed CEO,” he wrote.