Hellman & Friedman Reach Deal to Buy MultiPlan
May 05 2016 - 6:30PM
Dow Jones News
Private-equity firm Hellman & Friedman LLC has reached a
deal to buy health-care services provider MultiPlan Inc.
MultiPlan's owner, Starr Investment Holdings LLC, will retain a
minority investment in the company on behalf of its clients,
MultiPlan said in a news release Thursday.
News of the deal, and the $7.5 billion price, was earlier
reported by The Wall Street Journal. Starr and Hellman &
Friedman didn't disclose terms.
"We are pleased to be partnering with Hellman & Friedman, an
experienced investor in both health care and technology, and look
forward to our next chapter with them," MultiPlan Chief Executive
Mark Tabak said in the release.
It has been a fallow stretch for private-equity firms, which
have struggled to make acquisitions as a result of high valuations
and choppy debt markets. Starr, which is part of the insurance and
investment conglomerate run by former American International Group
Inc. chief Maurice "Hank" Greenberg, paid $4.4 billion for
MultiPlan in 2014.
Starr and its co-investor, Swiss asset manager Partners Group,
put up about $1.4 billion and borrowed the rest, according to a
person familiar with the matter. It was the biggest-ever
acquisition for Starr, which Mr. Greenberg founded after leaving
AIG in 2005.
Since Starr bought the company, MultiPlan's annual earnings
before interest, taxes, depreciation and amortization have risen by
more than 50% to about $650 million, the person said.
The deal is a big win for Starr and shows that even amid the
dearth of activity, there are still big gains to be reaped from
well-chosen private-equity buyouts.
In fact, MultiPlan, which has traded private-equity hands
several times, has been a consistent winner.
Carlyle Group LP bought the company in 2006 and, alongside
Welsh, Carson, Anderson & Stowe, sold it four years later to BC
Partners and Silver Lake for about $3 billion.
Carlyle more than tripled its money, while Silver Lake and BC
Partners more than doubled theirs, people familiar with the matter
have said.
MultiPlan was founded in 1980 as a network of New York hospitals
and is now one of the biggest independent U.S. preferred-provider
organizations. These companies organize and manage networks of
doctors and hospitals on behalf of insurers.
MultiPlan counts Cigna Corp. and Humana Inc. among its clients.
It has about 900,000 health-care providers under contract and
manages 40 million insurance claims a year, according to its
website.
Hellman & Friedman, founded in 1984, has raised a total of
$35 billion over the years. Notable investments it has made include
discount supermarket chain Grocery Outlet Inc., consulting firm
Wood Mackenzie Ltd. and Getty Images Inc.
Starr didn't run a traditional auction to sell MultiPlan,
according to people familiar with the matter. It had been
considering recapitalizing the business by using new debt to pay
itself a dividend when Hellman & Friedman made an offer, one of
the people said.
As part of the transaction, Singapore's sovereign-wealth fund
GIC and Leonard Green & Partners will invest alongside Hellman
& Friedman. Barclays, Goldman, Sachs & Co. and Simpson
Thacher & Bartlett are advising Hellman & Friedman. J.P.
Morgan Securities LLC and Kirkland & Ellis LLP are advising
MultiPlan and the seller, MultiPlan said in its release.
Write to Liz Hoffman at liz.hoffman@wsj.com and Dana Cimilluca
at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
May 05, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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