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Hanover-based Conmed Healthcare sold for $57.2M

Conmed Healthcare Management Inc., a Hanover-based company that provides health care services to detention centers, agreed to be acquired by privately held Ayelet Investments LLC for $57.2 million, Conmed announced Tuesday.

Conmed shareholders will receive $3.85 per share, about 8 percent more than Monday’s closing price of $3.56. The company’s shares gained 22 cents, or nearly 6.2 percent, Tuesday to close at $3.78.

The acquisition comes after much speculation and an announcement last month that Conmed was negotiating with Ayelet. In May, Conmed announced it was considering “strategic alternatives,” such as a possible sale.

“The company is well positioned for this next phase of development,” said Richard Turner, chief executive officer of Conmed, in a statement.

Thomas Fry, Conmed’s chief financial officer. said he hopes the acquisition will make Conmed more profitable and more competitive by changing it from a public to a private company.

“The shareholders are going to get a nice price that is higher than what shares had been trading at before we announced the deal,” he said.

Financing for the transaction is being provided in part by Levine Leichtman Capital Partners, a private equity firm based in Los Angeles. The merger is expected to close in the third quarter of this year, pending the approval of Conmed’s stockholders and other closing conditions.

In response to the announcement, several law firms announced investigations into the takeover on the grounds that it may have undervalued the company, making it unfair to Conmed shareholders. Conmed shares traded above the merger price, at $3.95, as recently as June 24, while some analysts have projected the value going forward at up to $5 per share.

Fry said lawsuits such as this are fairly typical after acquisitions.

Conmed has served county and municipal detention centers since 1984. The company serves adult and juvenile correctional facilities in nine states. The transaction was unanimously approved by Conmed’s board of directors.

Ayelet Investments is owned by Dr. James H. Desnick, a physician who as of June was Conmed’s third largest stockholder with 9.4 percent of its shares.