The Advisory Board Co. (NASDAQ: ABCO) watched its shares make a handy gain on Tuesday after the firm announced that it had entered into a definitive merger and purchase agreement. Specifically, the company intends to sell its health care business to Optum and its education business to affiliates of Vista Equity Partners.

According to deal, stockholders would receive an estimated cash per share of $54.29, which includes a fixed amount of $52.65 per share and the after-tax value at closing of the company’s 7.6% stake in Evolent Health.

The total merger transaction value, including the after-tax proceeds for the sale of the education business, is roughly $2.58 billion.

Prior to the closing of the merger of the health care business with Optum, affiliates of Vista will acquire the company’s education business, including Royall & Company, for $1.55 billion, subject to customary adjustments. The health care business will then merge with Optum for $1.3 billion, including the assumption of The Advisory Board’s debt.

Robert Musslewhite, board chair and chief executive of The Advisory Board, commented:

Our board of directors and executive leadership team conducted a thorough review of strategic alternatives for the Company. After careful consideration, we determined that transactions with Optum and Vista Equity Partners allow us to accelerate the success of our health care and education businesses while realizing immediate value for stockholders. We believe this is the best course of action for our stockholders, members and employees, and is a testament to our employees’ commitment, dedication and hard work in executing our plan and continuing to deliver outstanding value to our members.

Shares of the Advisory Board were last seen up over 6% on Tuesday $52.98, with a consensus analyst price target of $51.88 and a 52-week range of $24.85 to $59.50.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.