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Private equity circles Merge Healthcare: sources

By Greg Roumeliotis and Soyoung Kim

NEW YORK (Reuters) - Merge Healthcare Inc, a provider of medical imaging software solutions that is exploring a sale, has attracted interest from at least five private equity firms, according to people familiar with the matter.

Thoma Bravo LLC, GTCR LLC, Welsh Carson Anderson & Stowe, Francisco Partners and Avista Capital Partners are among the buyout firms that have had meetings with the company's management and considering submitting offers this month, the people said. Merge Healthcare hopes to have offers in by Friday, two of the people added.

Merge Healthcare, Thoma Bravo, GTCR and Avista declined to comment, while representatives of Welsh Carson Anderson & Stowe and Francisco Partners did not immediately respond to a request for comment.

Merge Healthcare ended trading at $3.07 on Thursday, giving the Chicago, Illinois-based company a market value of about $285 million. The shares are down about 37 percent year-to-date, compared with a 30 percent rise in the S&P 500 Health Care Technology index.

"We think it is difficult to predict the probability of a sale or the multiple that would be paid for the business because of the lack of growth and visibility," Dougherty & Company analysts wrote in a note published on November 1.

Merge Healthcare said in September that it appointed New York-based investment bank Allen & Company LLC to evaluate strategic alternatives, including a possible sale. The company reported a third-quarter net loss per diluted share of 4 cents last week, four times the loss it posted in the third quarter of 2011.

The company has been trying to transition from a traditional sales model of software and hardware to a more reliable subscription-based model. Subscriptions accounted for just 15 percent of Merge Healthcare revenue in the third quarter.

(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Gary Hill and Andre Grenon)

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