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Top of the Morning
KKR has agreed to acquire health information site WebMD (Nasdaq: WBMD) for around $2.8 billion (including debt), or $66.50 per share. That would represent a 20.5% premium to Friday's closing price, although is nearly flat from where WebMD was trading in late May 2016. Sellers would include BlackRock (10.48% of outstanding shares) and Blue Harbour Capital (9.13%), an activist investment firm founded by onetime KKR partner Clifton Robbins. KKR plans to merge WebMD with existing portfolio company Internet Brands.
- Why it's the BFD: This deal reflects how the torturous federal debate over healthcare policy — including drug pricing — has caused pharma companies to pull back on advertising. WebMD formally launched the auction in February, saying that it anticipated a significant revenue slowdown.
- Bottom line: "WebMD, which was founded in 1996 and primarily offers articles on health and healthcare, generated $705m in revenues last year. Almost 80 per cent of its sales were derived from advertising and sponsorship, with the bulk coming from the pharmaceuticals, biotechnology and medical device industries." –Adam Samson, FT