EMIS Group plc (AIM:EMIS) shares leapt 25% to 1,907p after the UK competition watchdog provisionally cleared its proposed £1.2bn takeover by US giant UnitedHealth Group Inc (NYSE:UNH).
The Competition and Markets Authority (CMA) said it will now consult on its provisional findings and listen to any further views before reaching a final decision.
It had referred the deal to an in-depth investigation in March as EMIS supplies the data management systems that UK National Health Service (NHS) doctors use for electronic patient records, while UnitedHealth's Optum arm supplies software used by GPs when prescribing medicines, as well as data analytics and advisory services to the NHS.
These are not competing services but the CMA was concerned that Optum and its competitors could use the data that EMIS holds and integrate their own software with EMIS’s electronic patient record system to compete in other markets, including the supply of population health management services and medicines optimisation software.
While the CMA's initial investigation identified concerns that the merger might reduce competition, the expert panel advising the deeper Phase 2 probe provisionally found the merger does not raise competition concerns.
Optum "would not, in practice, be able to use the EMIS business to harm the competitiveness of rivals", the investigation found, "primarily because the NHS would be able to use its oversight role to prevent the merged business from pursuing this kind of strategy".
In medicines optimisation software, the panel provisionally found that it would not be commercially beneficial for the merged business to restrict access to EMIS’s electronic patient record system.
The final report is due by 5 October.