Merge Healthcare and Ophthalmic Imaging Systems (OIS) have signed a definitive merger agreement pursuant to which Merge Healthcare will acquire OIS.
Upon the closing of this merger, Merge will add ophthalmic imaging and informatics to its current portfolio of enterprise imaging solutions for radiology, cardiology and orthopedics; a suite of products for clinical trials; software for financial applications; and pre-surgical management and applications.
Under the terms of the definitive merger agreement, OIS shareholders will receive 0.1693 share of Merge common stock for each share of OIS common stock, or approximately $30.3 million. The exchange ratio was calculated to equal $1.00 per OIS share using the five-day volume-weighted average price of Merge's common stock as of the close of trading on June 3, which was the last trading day before the definitive merger agreement was signed.
Based on currently outstanding shares of OIS common stock, the aggregate value of the Merge common stock to be issued as consideration will be approximately $30.3 million, before anticipated costs related to outstanding OIS debt, options and warrants. It is anticipated that the transaction will qualify as a tax-free reorganization for federal income tax purposes with respect to Merge common stock received by OIS shareholders.
Shareholders representing approximately 72 percent of OIS outstanding shares have agreed, pursuant to a shareholder support agreement, to support the transaction and to vote in favor of the proposed merger.
Pending customary closing conditions and the successful completion of a California Fairness Hearing, the transaction is expected to close in the third quarter of 2011.
HGP Securities, an affiliate of Healthcare Growth Partners, acted as financial advisor to OIS on the merger and provided a fairness opinion to the OIS Board of Directors. Troutman Sanders is serving as legal counsel to OIS, and McDermott Will & Emery is legal counsel to Merge.
Chicago-based Merge provides healthcare enterprise imaging and interoperability systems. Sacramento, Calif.-based OIS provides digital imaging and informatics systems for ophthalmology and other medical specialties.