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Veritas-backed Verscend to acquire Cotiviti for USD4.9bn

Verscend Technologies, a portfolio company of private equity firm Veritas Capital and a specialist in data-driven healthcare solutions, is to acquire Cotiviti Holdings, a provider of payment accuracy and analytics-driven solutions for the healthcare industry, for USD4.9 billion in cash.

Under the terms of the agreement, Cotiviti shareholders will receive USD44.75 in cash per share of Cotiviti common stock, and Verscend will assume all of Cotiviti’s outstanding debt, resulting in an enterprise value of approximately USD4.9 billion. The offer price represents a 32 per cent premium to Cotiviti’s unaffected share price as of 4 June, 2018 and a 136 per cent premium to the initial public offering price of Cotiviti’s common stock.
The combined business will operate as a private healthcare information technology company with unique, data-driven capabilities. Together, the companies are expected to have greater impact in the healthcare IT market by increasing affordability, reducing waste and improving outcomes and quality as well as offer new opportunities to create substantial value for clients, including complementary solutions across multiple intervention points in the payment process.
“We are thrilled to partner with Cotiviti, which has become an important player in the growing and increasingly important and complex healthcare payment accuracy space,” says Emad Rizk, MD, President and CEO of Verscend. “Together, Verscend and Cotiviti will offer our clients a comprehensive, integrated end-to-end solution to address the estimated USD900 billion in healthcare waste and abuse across the claims payment and care continuum. Financial data coupled with clinical data from our Risk Adjustment, Quality, and Population Health lines of business offer increased value to commercial payers, government entities, and providers.”
Doug Williams, CEO of Cotiviti, says: “We expect today’s transaction to deliver compelling value for Cotiviti shareholders and allow us to continue to execute our strategic growth plan. We are excited to be combining with Verscend, and believe that together we will create an organisation with robust data assets, expanded offerings and innovative technologies that will allow us to bring a broader portfolio of new and existing payment accuracy analytical solutions to our valued customers.”
“We believe Cotiviti is a perfect fit with both our investment strategy and with Verscend, and we look forward to taking the platform to the next level through this exciting combination,” says Ramzi Musallam, CEO and Managing Partner of Veritas Capital. “The aggregation of Cotiviti and Verscend’s complementary data sets and analytical capabilities, coupled with the unrelenting focus and commitment to support our customers, is expected to further drive value-added solutions and differentiated product development.”
The transaction, which was unanimously approved by Cotiviti’s Board of Directors, is expected to close during the fourth quarter of 2018. Closing of the transaction is subject to the approval of Cotiviti shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.
Advent International has entered into a voting agreement whereby it has agreed to vote shares representing approximately 44 per cent of the Company’s voting power in favour of the transaction.
Goldman Sachs and William Blair are acting as financial advisors to Cotiviti, and Latham & Watkins LLP is serving as legal advisor to Cotiviti.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Veritas.

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