BURLINGTON, Vt. — General Electric Co. said Thursday that its health care unit would buy IDX Systems Corp., which produces software for hospitals and doctors' offices, in a deal the companies valued at $1.2 billion.
Executives of both companies described the deal at a news conference as an ideal fit to take advantage in the rapidly expanding field of information health technology for health care.
"GE and IDX have just doubled the spectrum of our product line," said IDX CEO Jim Crook.
Shareholders of South Burlington-based IDX are to get $44 a share in cash, representing a 25 percent premium over the stock's closing price on Wednesday. IDX shares soared $8.08, or 23 percent, to close at $43.25 Thursday on the Nasdaq Stock Market, while shares of GE rose 16 cents to close at $33.65 on the New York Stock Exchange.
Separately, Chinese media reported that GE plans to buy a 7 percent stake in China's Shenzhen Development Bank. The deal, valued at $100 million, would give GE Consumer Finance a foothold in the growing personal loan market in China.
The two sides held a signing ceremony for the deal at Beijing's International Club on Wednesday, with an official announcement expected once relevant government departments approve the deal, the state-run China Securities Journal and other newspapers reported.
GE said the IDX acquisition would significantly increase its health care offerings and aid in its drive to accelerate the transition to electronic health records. IDX's administrative, clinical and imaging products will complement GE's Centricity-brand applications, the company said.
"GE and IDX have a shared vision on how to accelerate the adoption of electronic health records across the globe," Joe Hogan, president and CEO of GE Healthcare, said in a statement.
GE already has a strong business in medical imaging — the digital images from hospital cardiology and radiology departments, for example. IDX's strengths lie in electronic medical record keeping and billing.
"What's fantastic about this marriage is the two product sets are incredibly complementary," said Vishal Wanchoo, CEO of GE Healthcare Information Technologies, the GE division with which IDX will become affiliated.
IDX was founded in 1969 as Burlington Data Processing, which conducted payroll, billing and accounting functions. It entered the physician billing market a year later. Burlington Data Processing merged with Interpretive Data Systems in 1978 and assumed the IDS name. The name was changed to IDX in 1989.
GE and IDX said they expected the deal to close by early 2006, assuming approval by IDX shareholders and regulators. IDX holders owning about 20 percent of the company's shares have agreed to vote in favor of the buyout, and both companies' boards have approved the deal.