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What happened
For the second consecutive day, Evolutionary health (NYSE: EVH) the stock rose noticeably on Thursday. Shares rose more than 7% to close. This followed a 9% increase the day before. It is evident that investors are increasingly convinced that the burning rumors of a buyout will soon materialize.
So what
On Wednesday morning, Bloomberg published an article indicating that a large drugstore chain operator Alliance of Walgreens boots (NASDAQ: WBA) is in talks with Evolent to buy its healthcare counterpart. Citing “people familiar with the subject,” Bloomberg noted that Evolent is under pressure from activist investor Engaged Capital to consider a sale, among other “value creation” measures.
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Neither Evolent nor Walgreens have commented on the story yet. Bloomberg has not speculated on how much the latter would be willing to pay in a buyout transaction.
Engaged Capital bought an almost 10% stake in Evolent in August 2020. Within months, the two companies had agreed to a set of changes, including the appointment of a new member of Evolent’s board of directors and the formation of a strategic committee composed of members of the board of directors.
This committee was responsible for making “recommendations to the Board of Directors on value creation initiatives, in particular by improving the operations of the company, its financial performance (including cost reduction) and its strategy and of its overall commercial orientation â€.
Now what
Like most activist investors, Engaged Capital can be quite arrogant when it comes to increasing the value of its investments, especially when it comes to potential buyouts. This is probably the reason why investors are betting that a deal for Evolent can be made. This is also potentially good news for Walgreens: if it acquires Evolent, it could benefit from efficient use of the health computing platform of its new asset.
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Eric Volkman does not have a position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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