KKR Pulls the Trigger on $2.8 Billion Deal for WebMD

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Weekend chatter turned out to be right this time. KKR & Co. L.P. (NYSE: KKR) announced Monday morning that its Internet Brands portfolio company has agreed to acquire WebMD Health Corp. (NASDAQ: WBMD) in a transaction valued at around $2.8 billion. Internet Brands is paying $66.50 per share in cash for the online health information services, a premium of about 20% to Friday’s closing price of $55.19 and around 30% based on WebMD’s closing price on February 15, when the firm first announced that it was exploring strategic alternatives.

Internet Brands will commence a tender offer within 10 days to acquire all WebMD’s outstanding stock. The investment firm said funding for the transaction is fully committed and that the transaction is expected to close in the fourth quarter of this year.

Internet Brands operates in four areas: automotive, health, legal, and home and travel. The company’s health services include websites DentalPlans.com, eHealth Forum, HealthBoards, FitDay and VeinDirectory.org. Singapore’s sovereign wealth fund, Temasek, is KKR’s partner in Internet Brands.

WebMD Chairman Martin J. Wygod said:

After a thorough review of strategic alternatives, we are pleased to announce this transaction, which provides our stockholders with immediate and significant cash value and a substantial premium. Throughout this process, our Board has conducted diligent analysis and thoughtful deliberations. WebMD and its financial advisors had a process that involved outreach to more than 100 strategic and financial parties, and we are confident that this transaction maximizes value for our stockholders.

WebMD merged with Healtheon in 1999 in a swap merger valued at about $5.5 billion. Recent cutbacks in pharmaceuticals advertising combined with overall uncertainty on federal health care policy led the company to forecast lower revenues for this year and to begin looking for a buyer.

WebMD stock traded at $66.00 Monday morning, up 19.6% compared with Friday’s closing price. The stock’s 52-week low is $48.10, and the high of $66.06 was posted early this morning.