Ebix comes back with another offer for Healthaxis

By Lisa Kerner

Charlotte, N.C., Oct. 3 - Ebix, Inc. made a new offer for Healthaxis, Inc. that includes a $500,000 termination fee payable to BPO Management Services Inc. if the Ebix offer is approved by Healthaxis shareholders.

The offer follows Ebix's review of Securities and Exchange Commission filings by both Healthaxis and BPO.

According to Ebix, it received an "innumerable number of calls" from Healthaxis shareholders "conveying their understanding and concerns about the proposed merger with BPO."

In an Oct. 3 letter to the Healthaxis board of directors, Ebix proposed:

• Acquiring 8,840,968 common shares of Healthaxis for $0.725 per share in cash or the equivalent value in Ebix stock, valued at the floor value of $100.00 per share;

• Acquiring 740,401 preferred shares of Healthaxis held by LB I Group Inc. for a total of $610,831; and

• Paying Tak Investments $2.5 million for the warrants convertible to 3,333,334 shares of Healthaxis common stock. This money can only be received by Tak Investments in the form of equivalent-value Ebix stock, valued at the floor value of $100.00 per share.

Those electing stock will be given a one-year special put that will allow them to sell the stock back to Ebix within one year of the merger for $100.00 per share, Ebix said.

Ebix said its offer "represents a substantial premium over the proposed BPOM merger offer" and puts Healthaxis shareholders "in the driver's seat" with the ability to accept cash or Ebix stock.

The offer also establishes a guaranteed floor price of $0.725 for a common stock owner and a guaranteed floor price of $0.825 for a preferred share owner, for a period of one year from the Ebix-Healthaxis merger, according to the letter.

Healthaxis' board of directors rejected an unsolicited offer by Ebix to acquire the company for $3.5 million in cash and $3.3 million in Ebix stock in September.

As previously reported, Healthaxis agreed to become the health-care division of BPO Management Services through a reverse merger between the two companies.

Each share of BPO common stock will be exchanged for 0.3393 shares of Healthaxis common stock.

Shares of BPO preferred stock and other BPO securities will be exchanged for a mix of shares of Healthaxis common stock, preferreds and other securities based on various fixed exchange ratios, a prior BPO news release said.

Healthaxis said it will effect a reverse stock split in connection with the transaction's closing, which is expected during the fourth quarter of 2008.

Atlanta-based Ebix provides software for the insurance industry.

Healthaxis is a provider of health-care payer solutions located in Irving, Texas.

Based in Anaheim, Calif., BPO is a provider of business process outsourcing services focused on on-demand human resources, information technology, enterprise content management and finance support.

Mentioned in this article:

Ebix, Inc. Nasdaq: EBIX

Healthaxis, Inc. Nasdaq: HAXS

BPO Management Services Inc. OTCBB: BPOM

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