Internet Brands to acquire WebMD for $2.8 bn
25 July 2017
WebMD plans to sell itself for $2.8-billion to El Segundo online media company Internet Brands, in view of the turbulent nature of its online business.
The internet's leading destination for information about ailments and medications has been through several mergers and sales since it was founded in the late 1990s.
Private equity firm KKR, which owns Internet Brands confirmed the proposed acquisition. KKR plans to take WebMD private for $66.50 a share, or about a 20 per cent premium to the New York company's Friday close of $55.19.
According to a statement by Internet Brand's chief executive Bob Brisco, combining his company's websites with WebMD's would ''catalyze'' growth.
WebMD's revenue last year stood at $705 million, of which, 80 per cent came from selling advertising inside its websites and magazine. The rest came from sales of subscriptions for wellness education programmes to insurers and employers. Profit stood at $91 million last year.
However, investors held back growth over concerns about weakened ad sales growth, increased competition from firms such as Google and uncertainty about planned expansions into additional services for doctors and consumers.
According to commentators, the deal brought to a close a sale process that has been going on for some time and reportedly saw some 100 different bids for the health portal.
''After a thorough review of strategic alternatives, we are pleased to announce this transaction, which provides our stockholders with immediate and significant cash value and a substantial premium,'' said Martin J Wygod, Chairman of WebMD, in a statement.
''Throughout this process, our Board has conducted diligent analysis and thoughtful deliberations. WebMD and its financial advisors had a process that involved outreach to more than 100 strategic and financial parties, and we are confident that this transaction maximizes value for our stockholders.''