Optum’s $2.58 billion Acquisition of The Advisory Board Company Health Care Business

Goldman, Sachs & Co. LLC and Allen & Company LLC are acting as financial advisors to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to the Company. Evercore and Macquarie Capital are serving as financial advisors to Vista Equity Partners, and Kirkland & Ellis LLP is serving as its legal counsel.

The Advisory Board Company (NASDAQ: ABCO), a distinctive provider of research, technology and consulting to health care organizations and education institutions, today announced that it has entered into a definitive merger agreement to sell its health care business to Optum, a leading health services company, and a definitive purchase agreement to sell its education business to affiliates of Vista Equity Partners, a leading investment firm. Stockholders of the Company would receive estimated cash per share of $54.29, which includes a fixed amount of $52.65 per share and the after-tax value at closing of the Company’s 7.6% stake in Evolent Health, Inc., which has been estimated as of August 28, 2017. Total merger transaction value, including the after-tax proceeds for the sale of the education business, is approximately $2.58 billion.

Prior to the closing of the merger of the health care business with Optum, affiliates of Vista will acquire the Company’s education business, including Royall & Company, for $1.55 billion, subject to customary adjustments.

Following the closing of the education transaction, the Company’s health care business will merge with Optum for $1.3 billion, including the assumption of The Advisory Board Company’s debt. All of the outstanding shares of common stock of the Company will be converted into the right to receive $52.65 per share in cash plus an additional cash amount per share based on the after-tax value of the Company’s stake in Evolent at closing. Such additional amount will fluctuate between signing and closing.

Based on the closing trading price of Evolent’s Class A common stock on August 28, 2017, stockholders would receive total cash consideration per share of approximately $54.29 in the merger, representing a premium for stockholders of approximately 50% to the closing price of the Company’s common stock on the NASDAQ on January 11, 2017, which was the last trading day prior to the public disclosure of a significant minority investment in the Company.

Skadden is advising The Advisory Board Company with a team including M&A partners Jeremy London (Picture) (Washington, D.C.) and Richard Grossman, counsel J.A. Glaccum(Washington, D.C.) and associate Micah Kegley (Washington, D.C.); Tax partner Jessica Hough (Washington, D.C.); Intellectual Property and Technology partner Bruce Goldner; Executive Compensation and Benefits partner Regina Olshan and associate Page Griffin (Washington, D.C.); Corporate Finance partner Michael Zeidel; Real Estate partner Harvey Uris and counsel Peter Mair; Banking partner Stephanie Teicher; and Securities Litigation partner Scott Musoff.

 

Involved fees earner: Jeremy London – Skadden Arps Slate Meager & Flom; Richard Grossman – Skadden Arps Slate Meager & Flom; J.A. Glaccum – Skadden Arps Slate Meager & Flom; Micah Kegley – Skadden Arps Slate Meager & Flom; Jessica Hough – Skadden Arps Slate Meager & Flom; Bruce Goldner – Skadden Arps Slate Meager & Flom; Regina Olshan – Skadden Arps Slate Meager & Flom; Page Griffin – Skadden Arps Slate Meager & Flom; Michael Zeidel – Skadden Arps Slate Meager & Flom; Harvey Uris – Skadden Arps Slate Meager & Flom; Peter Mair – Skadden Arps Slate Meager & Flom; Stephanie Teicher – Skadden Arps Slate Meager & Flom; Scott Musoff – Skadden Arps Slate Meager & Flom;

Law Firms: Skadden Arps Slate Meager & Flom;

Clients: The Advisory Board Company;

 

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Author: Ambrogio Visconti