Misys gets reverse Midas touch

Misys boss Mike Lawrie and largest shareholder ValueAct Capital seemed to be onto a winner when they announced a deal earlier this week to spin off the company’s ailing healthcare business and merge it with rival Allscripts.

News of the deal – accompanied by an upbeat interim statement from the banking division – lifted Misys’ share price by 20% from 141.5 pence to 169.5 pence. This was not far off the 175p price point set on the placing of the 43 million new Misys shares which would be issued to help finance the merger and which would be underwritten by ValueAct.

By mid-day today, however, Misys’ share price had slipped back to 139.25p, perilously close to its year low of  135.25. The stock has not been helped by a broker note from Citigroup, which has re-rated Misys from ‘hold’ to ‘sell’ and reduced its target price to 130 pence. In the note, Citigroup said it sees the Allscripts-Misys deal as 13% dilutive to estimates for 2009 and six per cent dilutive for 2010 for shareholders in the UK company.

This is bad news for CEO Lawrie, who invested £500,000 in Misys’ shares on appointment at 198.75 pence a share, with a bonus match promised when the shares hit 225p.  

Lawrie continues to be bullish on the group’s prospects and insists that banking software sales are holding up despite the ongoing credit crisis.

He can’t afford any slip-ups in delivery. The next quarter could be critical to his fortunes and Misys' future as an independent company.