National Data Corporation (NYSE: NDC) (NDC) announced today the signing of definitive agreements to acquire two related health care database information management businesses. Under the first agreement, NDC agreed to acquire Source Informatics Inc. (Source), a privately held company. The second provides for the acquisition of the Over- The-Counter (OTC) Physician Survey business unit of Pharmaceutical Marketing Services Inc. (PMSI) as well as PMSI’s interest in a joint venture it formed with Source in the United States. In addition, NDC will provide certain license rights to PMSI, which is acquiring Source Europe.
NDC will issue 1,555,556 shares of its common stock and $31.75 million in cash to acquire Source. PMSI will receive 1,059,829 shares of NDC stock and $6.5 million in cash in exchange for the OTC business and joint venture. The acquisitions will be accounted for as purchase transactions.
The two businesses are expected to contribute in the range of $80 million in revenues to the NDC health care line of business. The acquired businesses will be based in Phoenix, Arizona.
Source is a major provider of information services to the pharmaceutical and other segments of the health care industry in the United States. These information services are based on the company’s extensive data collection, database management and analytical modeling capability. They produce a wide range of physician prescribing, pharmacy dispensing and drug usage information. These services are currently being used by pharmaceutical manufacturers, biotechnology companies, distributors and major pharmacy retail chains.
“This acquisition is a direct extension of our health care information strategy,” said Robert A. Yellowlees, chairman and CEO of NDC, and head of the company’s health care line of business. “It is the next phase of our plan to expand our database and other information service offerings. It leverages our unique network data access and information delivery capability to a growing range of health care industry participants. From the desktops of providers…to the information needs of managed care organizations and payers…to distributors and manufacturers, no one in the health care network information services industry provides the breadth and reach of National Data.
“At the same time, this combination will expand the range of real-time services that Source can offer its customers. It also provides increased critical mass and access to financial resources needed to accelerate growth of its existing business.
“We have worked closely with Source for a number of years and are impressed with the management team. This transaction will permit improved strategy, planning and program level integration between NDC’s expanding health care presence and Source’s proven health care data management services.”
Source, with headquarters in Phoenix, Ariz., will operate as part of NDC’s health care line of business. It will provide the nucleus for NDC’s new database management information service offerings. Robert R. Brown, currently president of Source, will serve as president of the business unit, reporting to Yellowlees.
“The agreement will benefit our mutual customers, employees, shareholders and business partners,” said Brown. “Source employees will become key members of the NDC team to deliver new and expanded services to our health care customers.”
The transactions are each dependent on the other closing, and are subject to customary closing conditions, including approval of the shareholders of Source and PMSI as well as expiration of the waiting period under the Hart-Scott-Rodino Anti-Trust Improvements Act.
The acquisition agreements provide that the NDC shares to be issued may be subject to adjustment based on the average trading price of a share of NDC common stock prior to closing in the event such price is less than $37.25 or greater than $50.50 per share.
National Data Corporation is a leading provider of value-added information services and systems for the health care and payment systems markets.Details