KKR’s Internet Brands acquires WebMD for $2.8B in cash

WebMD iOS app

Internet Brands, a KKR portfolio company, has entered into a definitive agreement to acquire WebMD in a transaction valued at approximately $2.8 billion.

Under the terms of the agreement, a subsidiary of Internet Brands will commence the acquisition of all of the issued and outstanding shares of WebMD common stock for $66.50 per share to be paid in cash upon completion of the transaction. This valuation represents a premium of approximately 30 percent to WebMD’s share price on February 15, 2017, the day before WebMD announced that it was commencing a process to explore and evaluate potential strategic alternatives, as well as a premium of approximately 20 percent over WebMD’s closing share price on July 21, 2017. The financing for the transaction is fully committed, and WebMD’s Board of Directors approved the merger agreement.

“We believe that this transaction will provide additional flexibility and resources to deliver increased value to consumers, healthcare professionals, employers, and health plan participants,” Steven L. Zatz, M.D., CEO of WebMD, said in a statement. “On behalf of everyone at WebMD, I would like to express our sincere appreciation to our employees for their hard work and dedication. I am confident this will be an exciting new chapter for WebMD.”

Internet Brands’ CEO Bob Brisco is also pleased with the deal. “Since its founding, WebMD has established itself as a trusted resource for health information,” he said. “We look forward to delivering that resource to even more users, by leveraging our combined resources and presence in online healthcare to catalyze WebMD’s future growth.”

Internet Brands’ Health vertical serves millions of consumers and more than 50,000 health care practices utilizing a multi-brand, multi-product approach. The company is the leading SaaS / Web Hosting player in the Health space, serving a wide variety of practice areas, including Dental, Chiropractic, Veterinary, Vision Care, and Mental / Physical Therapy. Its Health SaaS businesses provide web presence, online marketing, and practice management solutions to practices across the United States. These businesses include Demandforce, Officite, Sesame Communications, and Baystone Media. The company’s consumer-focused health brands provide content and online communities for consumers in search of health-related information. These include DentalPlans.com, eHealthForum.com, HealthBoards.com, FitDay.com and VeinDirectory.org.

Equity financing for the transaction is being provided primarily by KKR’s private equity funds.

J.P. Morgan Securities LLC is serving as the exclusive financial advisor to WebMD and Shearman & Sterling LLP is serving as legal advisor. Simpson Thacher & Bartlett LLP is serving as legal advisor to Internet Brands.

The acquisition is expected to close during the fourth quarter of 2017, subject to the satisfaction of customary closing conditions.