The Work

August 4, 2011 5:57 PM

Five Firms Advise on Blackstone's $3 Billion Health Care Acquisition

Posted by Tom Huddleston Jr.

Private equity firm the Blackstone Group announced Thursday that it will pay about $3 billion to acquire medical-billing services company Emdeon Inc.

Under the agreement, Blackstone will pay $19 a share for Nashville, Tenn.-based Emdeon--a premium of 17 percent over the company's Wednesday closing price. Emdeon shareholders General Atlantic and Hellman & Friedman, which together own approximately 70 percent of the company, have already agreed to vote their shares in favor of the deal.

The deal is yet another example of investors' heightened interest in the medical software industry. There have been almost 300 announced or completed acquisitions of medical software companies in the past five years, with an average deal size of $127.6 million, Bloomberg reports.

Ropes & Gray is representing Blackstone, with a corporate team that includes partners R. Newcomb Stillwell, David Chapin, and Jonathan Grandon. Other Ropes attorneys working on the deal include: Intellectual property partner Edward Black and counsel Thomas Burke; health care partner Deborah Gersh; tax partner Leo Arnaboldi III; employee benefits partner Andrew Oringer; labor and employment partner Diane Patrick; debt partner Jay Kim; environmental partner Peter Alpert; FCPA partner Asheesh Goel; and government enforcement partner Laura Hoey.

The firm has worked on various matters for Blackstone in recent years, including the $3.5 billion acquisition of the Weather Channel in 2008 by a consortium that included the private equity group.

Emdeon enlisted Paul, Weiss, Rifkind, Wharton & Garrison as counsel on the transaction. The firm's team includes corporate partners Matthew Abbott, Robert Schumer, and Dale Sarro, along with counsel Da-Wai Hu. Emdeon's general counsel is Gregory Stevens.

Emdeon's outside directors hired a King & Spalding team led by Atlanta corporate partner Jack Capers as counsel. Capers is joined by corporate partners C. William Baxley and E. William Bates II, as well as tax partner John Sweet.

Davis, Polk & Wardwell is advising shareholder General Atlantic on the deal, with a team headed by corporate partners John Amorosi and William Aaronson.

Hellman & Friedman, which will maintain a minority stake in Emdeon, is represented by Simpson Thacher & Bartlett. New York–based M&A partner Patrick Naughton and tax partner Steven Todrys worked on the deal for Simpson Thacher.

The firm often represents Blackstone on transaction work. (John Finley, Blackstone's chief legal officer, formerly headed the global M&A practice at Simpson Thacher.) But the firm was conflicted out of representing Blackstone on this deal due to its prior representation of Hellman & Friedman, according to Ropes partner Stillwell.

The transaction is expected to close in the second half of 2011, following stockholder and regulatory approvals. At that point, Emdeon--which went public in 2009 with Paul, Weiss advising--will become a privately held company.

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