A proposed $28 million merger between software giant Oracle and electronic health records company Cerner has been delayed for a second time.
In December 2021, Oracle announced its intentions to acquire Cerner, with a closing scheduled for February 2022. A joint investigation of the proposed merger by the DoJ and the FTC pushed the closing date back to March 16. Now, following a pension fund’s lawsuit, the sale has been delayed until mid-April.
The pension fund sued Cerner in Delaware, claiming that the company’s management facilitated the sale of the company to Oracle without allowing for other potential bids. Cerner’s management “expressed a clear preference for Oracle” and did not make notable efforts to maximize the potential sale price, according to the complaint filed in Chancery Court. Cerner’s board ignored a suitor that expressed interest in purchasing the company and potentially failed to fulfill its fiduciary duties, according to a case document.
Some of Cerner’s top executives, including a former Oracle employee, will receive a total of more than $64 million in severance if the proposed merger happens. The lawsuit claims that Cerner’s senior management was more concerned with heightening their compensation than they were with maximizing shareholder value.
Representatives for Cerner did not respond to requests for comment, and Oracle is not named as a defendant in the case, according to Bloomberg Law.
Oracle has remained patient, however, as the company’s Chief Executive Officer, Safra Katz, said that Oracle wants to break into the healthcare market, and that acquiring Cerner would be key to its doing so. Cerner is the main technology provider for the Department of Veterans Affairs’ electronic healthcare records. Both Cerner’s Millennium and HealtheIntent platforms are “the backbone of the VA’s health records modernization strategy,” according to Fed Scoop.
Though the transference of data from the VA’s legacy databases to Cerner’s platforms has not been seamless, as there have been issues with the accuracy with which clinical information has been transferred, according to the Government Accountability Office (GAO), Oracle has not flinched in its desire to acquire Cerner. If the deal is successful, it will be Oracle’s biggest acquisition to date.