Friday, May 30, 2008

TriZetto Group CEO Walks With $43.5 Million

The TriZetto Group (TZIX-$21.48) called a June 30 date for when stockholders will vote on the $1.4 billion deal for the healthcare software company to be taken private at $22 a share by Apax Partners, a private investment group with $35 billion in funds under management, according to a recent proxy filing.

Seeking to enjoin the proposed merger, three parties, including the City of Fort Lauderdale Police and Firefighters’ Retirement System, are petitioning the courts, claiming breach of defendants' fiduciary duties (too low of an offer) and allegations that the Company allegedly failed to disclose material facts regarding the merger. Huh?

Regular readers know that the 10Q Detective rarely sides with management, but be real! In our view, these are actions by soured investors—who probably bought stock in TZIX at $70 a share back in March 2000.

The offer price represents a premium of about 25 percent over the closing price the day prior to the announced deal.

UBS Securities values the deal in a range of implied present values of approximately $18.15 to $25.60 per share of TriZetto common stock, according to its discounted cash flow analysis, using discount rates ranging from 11.0% to 13.0 percent.

TriZetto paid $11 million to UBS for its financial advisory services in connection with the merger.

Silence is one of the hardest arguments to refute. ~ American humorist Henry Wheeler Shaw (1818 – 1885)

The architects of the deal, co-founders Jeffrey H. Margolis & Daniel J Spirek, and Chief Operating Officer Kathleen B. Earley will pocket $43.5 million, $7.5 million, and $6.7 million, respectively—regardless of what we might want to say about their operating performance while at the helm of this struggling software company.

Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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