EMIS Group plc (AIM:EMIS) shares dived 22.3% to 1408p after the connected healthcare software and services company’s proposed £1.2bn takeover by UnitedHealth Group Inc (NYSE:UNH) was referred by the UK’s Competition and Markets Authority (CMA) to a Phase 2 investigation.
Earlier this month UnitedHealth proposed to sell off Optum UK’s Medicines Optimisation and Population Health Management businesses in the UK as a remedy to the CMA’s concerns raised following its Phase 1 investigation.
Today the CMA said it has referred the acquisition for an in-depth investigation “on the basis that, on the information currently available to it, it is or may be the case that this merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the UK”.
In its earlier decision, the CMA said its initial investigation found the deal could reduce competition leading to worse outcomes for the NHS and ultimately patients and UK taxpayers.
Noting that Optum and its competitors rely on digital connections to the data that EMIS holds, and integrations with EMIS’s electronic patient record system, it said that if the merger went ahead as planned Optum could choose to limit these connections and the CMA said this could unfairly undermine competing businesses.
As a consumer of these products the NHS "could then face fewer options and higher prices or lower quality offerings".
Following today’s CMA decision EMIS and its suitor said they are “disappointed” and “continue to believe that the proposed remedy directly addresses the competition concerns raised by the CMA following its Phase 1 investigation”.
They said they are considering their options and will provide a further update in due course.