KKR To Acquire WebMD In $2.8B Deal

Global investment firm Kohlberg Kravis Roberts (NYSE:KKR) has agreed to buy WebMD Health Corp. (NASDAQ:WBMD) for about $2.8 billion. KKR will pay $66.50 per share in cash in the transaction. The financing for the transaction is fully committed. The acquisition is expected to close during the fourth quarter of 2017, subject to customary closing conditions.

Analysts said the deal price was higher than expected. The price is 33 percent higher than the stock’s trading price at the start of the year and a 20 percent premium of the Friday closing price of $55.19. The WebMD Board of Directors has approved the merger agreement. WebMD’s shares closed up 20 percent at $66.10 after the announcement.

The move will bring a slew of popular online health information websites under one umbrella. The WebMD website is one of the most popular health websites for consumers and medical professionals, logging more than 70 million monthly unique visitors in 2016. The website quickly became a prominent source to review medical symptoms, pharmacies, drugs and physicians. WebMD also provides wellness services. The company went public in 2005.

WebMD said five months ago that it would explore strategic options amid a slowdown in advertising revenue. Traffic to its sites declined 11 percent in users and 9 percent in page views in 2016 compared to the previous year. A company statement released in February said, “These alternatives could include, among other things, the sale of part or all of the company, a merger with another party or other strategic transaction or continuing to execute on WebMD’s business plan.”

KKR is planning fold WebMD’s websites, including WebMD.com and Medscape.com, into its Internet Brands unit, which includes sites such as DentalPlans.com and AllAboutCounseling.com. Analysts believe that WebMD is a good fit for Internet Brands’ portfolio. Under the terms of the agreement, a subsidiary of Internet Brands will commence a tender offer in the next 10 business days to acquire all of the issued and outstanding shares of WebMD.

Internet Brands licenses and delivers its content and internet technology products and services to small and medium-sized businesses. The unit was acquired by KKR in 2014 for $1.1 billion from two other private equity firms, Hellman & Friedman LLC and JMI Equity. Bob Brisco, Internet Brand’s chief executive, said in a statement, “We look forward to delivering that resource to even more users, by leveraging our combined resources and presence in online health care to catalyze WebMD’s future growth.”

KKR separately announced it would buy a major stake in Nature’s Bounty Company from the Carlyle Group. While the financial terms of that deal were not disclosed, Carlyle is expected to retain a significant stake in the company.

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