By Neil Versel

March 18, 2008 | Misys Healthcare continued its extreme corporate makeover by announcing early Tuesday its intention to merge with ambulatory health-IT powerhouse Allscripts.

According to the merger agreement, Misys Healthcare’s London-based parent company, Misys plc, will offer full equity in the Raleigh, N.C.-based health care division plus $330 million in cash in exchange for a controlling, 54.5 percent stake in the combined company. In turn, Allscripts will pass the $330 million to its shareholders in the form of a special dividend, at the rate of approximately $4.90 per share, the two companies say.

The combined firm, tentatively called Allscripts-Misys, will exist as a yet-undetermined subsidiary of Allscripts and operate from the current Allscripts headquarters in Chicago. Most current Allscripts executives are keeping their jobs, though Misys plc chief Mike Lawrie will become executive chairman of the board of directors, and Misys will control six of 10 board seats, the two companies say.

“We’ve created today a clear leader in the clinical software, connectivity, and information space for physicians in the United States,” Allscripts chief executive Glen Tullman said in a video interview posted online this morning.

“We take Misys’ very strong position in practice management and we combine that with Allscripts’ undisputed leadership in clinical applications like electronic health records,” Lawrie added in the company-provided video. “This is one of the first times in the ambulatory space where we’re putting together two significant assets and really gaining the critical mass necessary to make a difference in how health care is delivered in the U.S.”

Together, Misys and Allscripts claim they will serve 150,000 U.S. physicians with their products, or about one-third of doctors practicing in non-inpatient environments. The customer base also includes 700 hospitals.

The companies say the merger will create $15 million to $20 million in pre-tax savings during the first full year after the deal closes, and $25 million to $30 million annually in subsequent years. Allscripts reported 2007 revenues of $282 million, while Misys Healthcare had $376 million in sales for the 12 months ended May 31, 2007, making the combined company a $658 million entity.

Both companies have struggled of late. Allscripts shares hit a 12-month low of $8.67 in intraday trading on the Nasdaq Monday, before closing at $8.76 on the Nasdaq, though the price has shot up more than 20 percent Tuesday morning on the merger news. Investors punished Allscripts last month for falling short of analysts’ expectations for 2007 income.

Misys Healthcare had a management shake-up little over a year ago in the wake of disappointing financial results for 2006.

Last summer, Misys Healthcare sold off its inpatient electronic medical records (EMR) and its diagnostics systems divisions in separate transactions valued at $414.5 million, leaving the company with three markets: physician office IT, home care, and health care claims management. (See “Misys Drops Two Business Divisions.”) Just last month, Misys made good on its promise to open the source code to its Misys Connect interoperability software. (See “Deals, Deployments, and Short News - Feb. 19, 2008.”)