EMIS (EMIS:AIM) £19.08

Gain to date: 39%

Readers who backed our recent arbitrage call on EMIS (EMIS:AIM) should be feeling pretty chuffed having banked a rough 39% in five weeks, and we called it spot on.

We said at the time (6 Jul) that this investment pitch was ‘a little different to the sort of investment ideas Shares typically presents to readers,’ but having paid-off much like we said it might, what should shareholders do now?

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

First, let’s recap. NHS technology platform supplier EMIS provides vital technology to the UK’s thousands of GP practices and millions of NHS users. A £1.2 billion takeover offer from US peer UnitedHealth (UNH:NYSE) was agreed more than a year ago, but the deal was put under investigation by the UK’s Competition and Markets Authority.

EMIS is estimated to hold a UK market share of more than 50% in electronic patient records through its EMIS Web platform. The company currently integrates with several third-party systems but doing so in the future could
be seeding business to rivals of Optum, UnitedHealth’s UK arm.

Now the CMA has changed its mind about competition concerns in a late volte-face, largely because it thinks the NHS will be able to use its oversight role to prevent the merged business from harming the competitiveness of rivals.

Megabuyte analyst Ieuan Turner says: ‘Remarkably, no disposals have been deemed necessary as it all stems down to the oversight role that the NHS holds in the UK healthcare market.’

WHAT SHOULD INVESTORS DO NOW?

The CMA will conduct a public consultation on the provisional findings before it releases its final report, scheduled for October 2023, but the stock has surged, to £19.08.

That modest discount to the £19.25 agreed cash takeover price suggests some marginal doubts over the deal remain, although a spanner being thrown into the works looks very unlikely. Still, why take any risk at all?

Shares believes you’re better off closing the trade now, banking your 39% profit (less costs) and moving on to something else.

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