Corporate News Blog – The Advisory Board Co. Enters into Agreements for the Sale of its Health Care and Education Businesses

LONDON, UK / ACCESSWIRE / August 31, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for The Advisory Board Co. (NASDAQ: ABCO) (“ABCO”), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=ABCO. The Company announced on August 29, 2017, that it has entered into a definitive merger agreement to sell its health care business to Optum and a definitive purchase agreement to sell its education business to affiliates of Vista Equity Partners. Optum is a leading information and technology-enabled health services business, which is a part of the UnitedHealth Group (NYSE: UNH) while Vista Equity Partners is a US-based investment firm. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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Merger of Healthcare Business to Follow Acquisition of Education Business

Firstly, the affiliates of Vista will acquire ABCO’s education business, including Royall & Company, for an approximate value of $1.55 billion, subject to customary adjustments.

Post the closing of the transaction for the education business, ABCO’s healthcare business will merge with Optum for about $1.3 billion, including the assumption of The Advisory Board Co.’s debt.

Transaction Value and Payout for stockholders

It is expected that ABCO’s stockholders would receive an estimated $54.29 per share in cash. This includes a fixed amount of $52.65 per share, and after-tax value (at closing) of ABCO’s 7.6% stake in Evolent Health Inc., estimated as of August 28, 2017. The additional amount could vary between signing and closing.

The cash consideration of @54.29 represents nearly 50% premium on the closing price of ABCO’s common stock on the NASDAQ as on January 11, 2017. This was the last trading day before making a public disclosure of a significant minority investment in the Company.

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

Transactions to Create Immediate Value for Stockholders

Robert Musslewhite, Chairman and Chief Executive Officer of ABCO shared his views on these transactions. He stated that ABCO’s Board of Directors and executive leadership team had conducted a thorough review of strategic alternatives for the Company. They had decided upon these transactions with Optum and Vista Equity Partners after careful considerations. These would enable the Company to boost the success of its healthcare and education business and create immediate value for stockholders. He believes this to be the best course of action for ABCO’s stockholders, members as well as employees. In fact, he said that this move is a testament to their employees’ commitment, dedication, and hard work in continuing to deliver outstanding value to customers.

About the Health Care Merger

Advisory Board is the health care business of The Advisory Board Company. It is a best practices firm, which uses a combination of research, technology, and consulting to enhance the performance of over 4,400 health care organizations.

Strategic Rational for the Deal

The industry-leading independent research, strategic health care advisory services and strong analytic capabilities of ABCO will compliment Optum’s product and services, all for the benefit of their healthcare stakeholders.

Moreover, Optum’s extraordinary data analytics resources and operational expertise in delivering large-scale solutions and its investment capital will fortify ABCO’s offerings. It will also help ABCO expand into new health care markets.

The merger brings together best-practice solutions with a comprehensive health care focused advisory business. Thus, the combined organization would improve the healthcare system by assisting its clients in swiftly responding to changing market dynamics.

As per the agreement, Optum would enhance the range, impact and value of ABCO’s research for its members, while offering a greater range of advisory and technology capacities to its members. Larry Renfro, Optum’s CEO, announced that together, ABCO and Optum would provide greater strategic insights and practical operational value to their clients, who are always looking for ways of enhancing health care and responding to the changing market dynamics. Robert Musslewhite, ABCO’s CEO, will continue to lead its health care advisory business.

Transaction Closing Conditions

As of now, ABCO’s Board of Directors has unanimously approved the merger agreement and has also suggested that the Company’s stockholders adopt the merger agreement. The deal is also subject to the satisfaction or waiver of certain other closing conditions such as the US antitrust clearance and the closing of the sale of the education business.

It is expected that the merger would close by the end of 2017 or in early 2018, although it is contingent on the approval of the Company’s stockholders. However, the merger is not subject to any financing condition.

Nonetheless, Elliott Management has agreed to vote its shares in support of the merger at the upcoming stockholder meeting.

About the Sale of Education Business

EAB is the education business of The Advisory Board Co. It is a best practices firm, which uses a combination of research, technology and services to enhance the performance of over 1,200 educational institutions.

Strategic Rational for the Deal

After the acquisition by Vista Equity Partners Portfolio Company, EAB will continue to operate as a standalone business dedicated to serving the interests of its members. In fact, the acquisition will enhance EAB’s capability to realize growth opportunities in the dynamic industry.

Vista Equity Partners has substantial experience in building and growing strong and durable businesses, coupled with deep knowledge of the education industry. More often than not, it invests in businesses with an established customer base, high customer retention, superior return on investment, and strong recurring revenue, led by experienced management teams with a long-term perspective.

Transaction Closing Conditions

It is expected that the sale of the education business would close by end of 2017 or in early 2018.

As of now, the transaction is subject to the satisfaction or waiver of certain closing conditions, such as US antitrust clearance.

Also, the ABCO’s obligation to close sale of the education business is subject to the satisfaction of the closing conditions under the merger agreement.

The sale of the education business is not subject to any financing condition and does not require approval of the Company’s stockholders.

Last Close Stock Review

Advisory Board’s share price finished yesterday’s trading session at $53.10, marginally advancing 0.09%. A total volume of 3.04 million shares have exchanged hands, which was higher than the 3-month average volume of 744.61 thousand shares. The Company’s stock price surged 1.34% in the last three months, 17.22% in the past six months, and 25.86% in the previous twelve months. Additionally, the stock skyrocketed 59.70% since the start of the year. Shares of the Company have a PE ratio of 20.05 and currently have a market cap of $2.17 billion.

On Wednesday, August 30, 2017, the stock closed the trading session at $195.88, marginally down 0.43% from its previous closing price of $196.73. A total volume of 1.48 million shares have exchanged hands. UnitedHealth’s stock price soared 9.08% in the last three months, 17.08% in the past six months, and 43.11% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 22.39%. The stock is trading at a PE ratio of 23.55 and has a dividend yield of 1.53%. At Wednesday’s closing price, the stock’s net capitalization stands at $189.77 billion.

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