Five months ago, the popular health information website WebMD announced that it would employ strategic alternatives in a bid to maximize shareholder value. In the wake of July 24th, 2017, the company had changed its mind, and it had struck a deal to be acquired by Internet Brands for $2.8 billion. Internet Brands is a company known for offering online content for a number of key vertical markets.
Internet Brands was founded in the late 1990s and was initially known as CarsDirect.com. It is a portfolio company of the private equity firm KKR. KKR, leveraged a buyout of RJR Nabisco and in light of these became the source of inspiration for the book and later the movie, “Barbarians at the Gate.” In 2014, KKR acquired internet brands. The company owns online properties that focus on different disciplines including automobiles, health, legal, and home/travel. Internet Brands had also announced earlier that it would acquire the online portfolio dentalplans.com.
A subsidiary of Internet Brands is expected to pay $66.50 per share in cash when the deal is completed as stipulated in the acquisition agreement with WebMD. The $66.50 per share price was 20 percent higher than WebMD’s closing share price on Friday 21st, 2017.
“The offer represents a substantial premium for our stockholders, our advisers reached out to more than 100 strategic and financial parties as we were exploring our options,” remarked WebMD chairman Martin Wygod.
“We believe that this transaction will provide additional flexibility and resources to deliver increased value to consumers, healthcare professionals, employers and health plan participants,” commented WebMD Chief Executive Officer Steven Zatz. He further added, “I am confident that this will be an exciting new chapter for WebMD.”
WebMD has been operational since 1996, operating a network of health-related portals for consumers and medical professionals. WebMD owns public sites such as WebMD.com, MedicineNet.com, RxList.com, eMedicineHealth.com, Medscape.com, and WebMD.boots.com. In addition, the company runs a private portal WebMD Health services. The portal offers wellness services and information to health plan providers and employers.
WebMD was ranked as the 36th largest multi-platform digital property by comScore in the month of June after having acquired close to 72 million unique visitors. 60 percent of WebMD’s revenue in ads is reported to have come from its Medscape property. Merging and sale opportunities were explored because of the recently declining revenues.
Internet Brands reported that its sites attracted people in the tune of 100 million every month most of them first-time victims and this showed a rapid growth in the company’s health vertical. Demandforce, eDoctors, eHealth Forum and TheGoodDrugsGuide.com, are other health sites reported to be large providers of SaaS solutions in the health space.
“KKR and Internet Brands are pleased to be investing behind the experienced WebMD management team and their trusted WebMD platforms,” remarked Internet Brands Chairman Herald Chen. He further added, “The combined portfolio of leading vertical Internet assets will be powerful. We look forward to supporting and accelerating growth and global expansion of the businesses.