Updated below with more deal details: Consumer financial information and lead gen service Bankrate (NSDQ: RATE) is being acquired by PE firm Apax Partners, in a deal just announced. The North *Palm* Beach, FL-based company is also announcing its its horrendous Q209 prelim results in conjunction with the deal. Will this open up the floodgates for more PE deals of this size? Sure everyone’s looking forward to it if it happens. And with record pace, a shareholder lawsuit is already in the works.
– Apax will commence a tender offer to acquire all of the outstanding common stock of Bankrate, for $28.50 per share in cash, followed by a merger to acquire all remaining outstanding Bankrate shares at the same price paid in the tender offer.
– The offer price represents a premium of 15.8 percent over yesterday’s closing stock price and 18.2 percent over the average closing price for the previous ten trading days.
– The transaction is valued at approximately $571 million.
– Apax is providing 100% of the financing for the acquisition from its equity funds ($35 billion in total) under management.
– Shareholders representing approximately 24 percent of Bankrate’s outstanding shares have entered into support agreements with Apax already.
– Transaction expected to close in Q309.
– Bankrate’s financial advisor was Allen & Co (of course, who else). Apax’s financial advisor was Stephens. Allen & Co and Needham & Co provided fairness opinions on the transaction.
– Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, Savingforcollege.com, Fee Disclosure, InsureMe, CreditCardGuide.com and Bankaholic.com (which it bought, by the way, for $15 million last year).
Reasons for the deal:
– Official: Bankrate CEO: This gives us “significantly enhanced flexibility to execute on our long-term strategy in a difficult economic climate.” Apax: “We are delighted to be investing in a company that straddles two of our core investment sectors, media and financial services.”
– Unofficial: Economy has tanked, based off the financial crisis, and so has Bankrate core lead-gen business. People aren’t buying financial services/credit cards. If anything, they’re paring back on it. Plus lots of new competition in the personal finance space as well.
– An aside: Bankrate was founded approximately 30 years ago as a print publisher of the newsletter Bank Rate Monitor (who knew?). It went online in 1996. Lots more history of the company in its latest 10-Q.
Bankrate also announced its preliminary Q209 earnings today, and the picture isn’t pretty, the main reason it took this deal. Q2 revenues: $31.0 million compared to $40.2 million in Q208, a decrease of 23 percent. Net income was $1.9 million, compared to $4.1 million in Q208. “Macroeconomic conditions have continued to impact financial advertising, particularly in our banking, mortgage and credit card channels,” said Thomas. Evans, President and CEO of Bankrate. “Revenue and EBITDA for the year will be well below the current consensus estimates,” he added.
This is Apax’s first big media acquisition after it bought Emap in UK in a consortium with Guardian Media Group, our parent, two years ago.
Updated with details from an SEC filing (our story here):
– There is a $30 million termination fee if Bankrate accepts a higher offer.
– “Parent may terminate the Merger Agreement for any reason by paying a termination fee to Bankrate equal to $570,800,000.” Apax may have to pay the whole amount if it terminates the deal? Maybe I am reading this wrong…