Notable Mergers and Acquisitions 8/9: (PGND) (MWW) (WMB)/(WPZ) (HSTM)

August 9, 2016 9:41 AM EDT

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*** Press Ganey (NYSE: PGND) entered into a definitive agreement to be acquired by EQT Equity fund EQT VII (“EQT”), part of the global private equity group EQT. Under the terms of the agreement, EQT will acquire all of Press Ganey’s common stock. Shareholders of record will receive $40.50 in cash per share of Press Ganey common stock, resulting in an enterprise value of approximately $2.35 billion. The offer price represents a 20% premium to the year to date volume-weighted average price and a 62% premium to the initial public offering price for the common stock. The acquisition of Press Ganey represents EQT’s first direct EQT Equity investment in North America.

“We are very excited about this transaction as it delivers value for our shareholders and allows Press Ganey to accelerate our investment in both acquisitions and product innovation that best serve our clients,” said Patrick Ryan, CEO of Press Ganey. “I have tremendous respect for EQT as a top flight investment firm, and I look forward to partnering with them as we develop new solutions to advance patient-centered care in the United States and internationalize the business in the next phase of our development.”

“We are excited by the unique opportunity to acquire Press Ganey, in a transaction highlighting EQT’s deep expertise and commitment to investing in market-leading healthcare companies,” said Eric Liu, Partner at EQT Partners Inc., Investment Advisor to EQT Equity. “As one of the most active global healthcare investors, with a demonstrated track record of success, we believe that EQT is an ideal partner for Press Ganey, as the Company seeks to expand both organically and through acquisitions. EQT will leverage its deep platform and provide valuable resources to support Press Ganey’s continued growth.”

“Press Ganey has made a tangible contribution to improving healthcare delivery by empowering patient voices,” said Norman W. Alpert, Chairman of Press Ganey and Co-President of Vestar Capital Partners. “We are pleased with the value delivered to shareholders and the opportunity for the organization to enter its next phase of growth with EQT.”

The agreement followed the unanimous approval by Press Ganey’s Board of Directors. Completion of the transaction is subject to the expiration of a “go-shop” period, the expiration or termination of the applicable waiting period under Hart-Scott-Rodino Antitrust Improvements Act, Press Ganey shareholder approval and other customary closing conditions. The acquisition is expected to be completed during the fourth quarter of 2016.

Barclays and Goldman Sachs are acting as financial advisors to Press Ganey, and Latham & Watkins LLP and Richards, Layton & Finger, PA are serving as legal advisors to Press Ganey. BofA Merrill Lynch is acting as financial adviser to EQT, and Simpson Thacher & Bartlett LLP is serving as legal advisor to EQT Partners. Fully committed financing of the transaction has been provided by Credit Suisse, Citi and BofA Merrill Lynch.

*** Randstad Holding nv and Monster Worldwide, Inc. (NYSE: MWW) announced the signing of a definitive agreement under which Randstad will acquire Monster. Under the terms of the merger agreement, Randstad will pay $3.40 per share in cash, or a total purchase price of approximately $429 million (enterprise value).

By leveraging Monster's multiple distribution channels to bridge two different but complementary parts of the extended recruiting industry, Randstad intends to build the world's most comprehensive portfolio of HR services. Monster will continue operating as a separate and independent entity under the Monster name.

"In an era of massive technological change, employers are challenged to identify better ways to source and engage talent," said Jacques van den Broek, CEO of Randstad. "With its industry leading technology platform and easy to use digital, social and mobile solutions, Monster is a natural complement to Randstad. The transaction is aligned with our Tech and Touch growth strategy and reflects our commitment to bringing labor supply and demand closer together to better connect the right people to the right jobs. We look forward to welcoming the Monster team and working together to shape the evolving global job industry."

"Joining Randstad provides a unique opportunity to accelerate our ability to connect more people to more jobs," said Tim Yates, CEO of Monster. "Together with Randstad, Monster will be better positioned to fulfill our core mission, and our employees will benefit from becoming part of a larger, more diversified company. Equally important, this transaction offers immediate value to our shareholders. We are excited to join and be supported by Randstad, as we continue to build the best recruiting media, technologies, and platforms. We look forward to working with the Randstad team to ensure a smooth transition."

Strategic and Financial Benefits

  • Brings Together Complementary Visions to Lead Transformation: Randstad and Monster have a shared vision for the global job industry, which is rapidly transforming as a result of technology advances. The transaction is intended to accelerate their ability to develop new and innovative capabilities that deliver greater value to job seekers and employers by bringing labor supply and demand closer together.
  • Creates Most Comprehensive and Technologically Advanced Capabilities for Human Resources Services: Randstad continues to enhance its business model in the rapidly shifting landscape, placing annually more than 2 million people worldwide through its network of more than 4,500 branches and client-dedicated services. With the addition of Monster's leading recruiting media, technologies, and platforms which connect people and jobs in more than 40 countries, Randstad intends to further expand its services to offer both clients and candidates tools for increased efficiency and engagement, connecting more people to more jobs.
  • Financially Compelling: The transaction is expected to be immediately accretive to Randstad earnings per share.

Terms of the Agreement

Under the terms of the merger agreement, Randstad has agreed to commence a tender offer, through a wholly-owned subsidiary, to acquire all of the outstanding shares of Monster common stock for $3.40 per share in cash. The Boards of Directors of both Randstad and Monster have unanimously approved the terms of the merger agreement, and the Board of Directors of Monster has resolved to recommend that shareholders accept the offer, once it is commenced. The consideration represents a 22.7% premium to Monster's closing stock price on August 8, 2016, the last trading day prior to today's announcement and a 30.1% premium to the 90 day volume weighted average stock price. The purchase price implies an enterprise value to LTM 6/30/2016 Adjusted EBITA multiple of 8.9x (excluding stock based compensation) and 10.3x (including stock based compensation). The acquisition is structured as an all-cash tender offer for all outstanding issued common stock of Monster followed by a merger in which remaining shares of Monster would be converted into the same U.S. dollar per share consideration as in the tender offer. The transaction does not have a financing condition and is expected to be completed in the fourth quarter of 2016, subject to regulatory approvals.

Financing and Approvals

Randstad intends to finance the acquisition through its existing credit facilities. The transaction is subject to the satisfaction of customary closing conditions, including the tender of the majority of the outstanding Monster shares and the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the approval of the European Commission (or the approval by those national competition authorities in the European Union that have jurisdiction as a result of a referral of the transaction under the EU Merger Regulation (Council Regulation 139/2004 of the European Union)) of the transaction pursuant to the EU Merger Regulation. Monster is expected to be delisted from the NYSE and integrated into Randstad thereafter.

Randstad M&A Update Randstad has used M&A to accelerate its strategy during the last nine months. Randstad's balance sheet is expected to remain solid after the closing of the recent string of acquisitions (Net Debt/EBITDA will remain well below 1.5x, compared to its policy to remain below 2x). The cumulated impact of M&A, announced during the last nine months, on Randstad's revenue will be ~ € 2 billion on an annualized basis. The main focus for Randstad going forward with respect to acquired companies will be on integration and implementation. As such Randstad will reduce the pace of M&A and it is expected to limit this in the medium term to around € 100 million.


Wells Fargo Securities is serving as exclusive financial advisor to Randstad and Jones Day is serving as legal counsel. Evercore Group L.L.C. is serving as exclusive financial advisor to Monster and Dechert LLP is serving as legal counsel.

*** Williams (NYSE: WMB) and Williams Partners (NYSE: WPZ) announced today they have agreed to sell the companies’ Canadian businesses to Inter Pipeline Ltd. for combined cash proceeds of $1.35 billion CAD.

In connection with the sale, Williams agreed to waive $150 million USD of incentive distribution rights in the quarter following closing to facilitate the Partnership’s consent to the sale in recognition of the value of inter-company contracts. After taking into account this waiver, Williams Partners will receive net consideration of ~$817 Million USD and Williams will receive net consideration of ~$209 Million USD.

At closing, in compliance with certain tax rules pertaining to a sale of Canadian assets by a foreign parent, 25 percent of the proceeds will be deposited with the Canadian Revenue Authority ("CRA") or an escrow agent pending receipt of CRA tax clearance which is expected in late 2016 or early 2017. The companies do not expect a taxable gain in light of the substantial tax basis in the assets. Williams and Williams Partners plan to use the cash proceeds from the transaction to reduce borrowings on credit facilities.

“We are proud of the tremendous businesses our Canadian team has built since we first began operating in Canada in 2002,” Williams’ President and Chief Executive Officer Alan Armstrong said today. “This transaction represents significant progress on a major component of the 2016 capital and financing plan we announced in January.”

The transactions are expected to close in 2016. Closing is subject to customary closing conditions including Canadian regulatory approval. TD Securities Inc. acted as lead financial advisor to Williams on the transactions and provided fairness opinions to the board of directors of both Williams and Williams Partners that the consideration to be received under the transaction was fair, from a financial point of view, to each company respectively. Barclays acted as a co-advisor to Williams on the transactions.

*** HealthStream, Inc. (Nasdaq: HSTM) announced that it has acquired Morrisey Associates, Inc., a Chicago-based subsidiary of Morrisey Holdings, Inc. Through this transaction, HealthStream’s Provider Solutions segment gains a wide array of market leading products for credentialing and privileging healthcare professionals, adding to its Echo line of solutions. HealthStream’s innovative approach to talent management supports healthcare organizations’ needs to manage their workforce along multiple dimensions, including the management of their qualifications and competencies. The acquisition of Morrisey Associates further enables HealthStream to provide an expanded solution set for both of these needs.

“Ensuring that you have qualified healthcare providers is the first step for all healthcare organizations in delivering quality care to patients—and that’s why we are committed to offering the best provider solutions in the healthcare industry,” said Robert A. Frist, Jr., chief executive officer, HealthStream. “With the acquisition of Morrisey Associates, HealthStream gains an expanded source of market leading credentialing and privileging solutions, delivering important synergies for innovation in this key area of healthcare organizations’ workforce requirements.”

Hospitals are responsible for ensuring the highest quality of care possible for patients and, therefore, credentialing is mandatory. Credentialing is the process by which hospitals evaluate and verify the qualifications of their healthcare providers to ensure that each practitioner possesses the necessary qualifications to provide medical services to patients. Once a practitioner is credentialed, the hospital will assess his/her competencies in a specific area of patient care through a process known as privileging. The Joint Commission requires ongoing, periodic assessments of practitioners’ competencies and performance for maintaining accreditation. The acquisition of Morrisey Associates adds to our products that support every step in these processes.

MSO for the Web™ (MSOW), Morrisey Associates’ Web-based provider credentialing software, streamlines the entire credentialing process, from onboarding through reappointment, by eliminating paper-based, manual administrative tasks. It automates online applications, primary source verifications, contract and network management, credentialing packet reviews, and peer reviews. Also, Morrisey Associates’ Privilege Content and Criteria Builder™ (PCCB) helps healthcare organizations verify that clinical practitioners are qualified to perform specific procedures using a robust criteria-based system. Morrisey Associates offers a comprehensive, vetted library of delineated privileges for more than 100 adult and pediatric specialties, encompassing physicians, advanced practice allied health professionals, and non-physician specialties. Hospitals also receive a list of stand-alone privileges and procedures that may be available for one or more specialties.

As president of HealthStream’s provider solutions business, Michael Sousa will assume executive leadership of Morrisey Associates, a HealthStream Company. “I look forward to welcoming Morrisey Associates’ customers and employees to HealthStream,” said Michael Sousa. “We are excited that our portfolio of provider solutions now includes MSOW, PCCB, and the experienced consulting team from Morrisey Associates. We believe that the expertise, resources, and capabilities of HealthStream, Echo, and now Morrisey Associates will combine to deliver innovation that yields the most advanced platform, proprietary content, and validated data to accelerate and optimize medical staff credentialing and privileging for hospitals.”

“As the founder of Morrisey Associates, I have always been committed to providing superior products and services to help our customers deliver excellent patient care,” said Jerry Zoldan, chief executive officer, Morrisey Associates. “As the industry continues to change and we sought a strategic partner to further our goals, HealthStream was a perfect fit. We are both focused on providing exceptional credentialing and privileging solutions and everyone at Morrisey Associates is excited by the opportunities that this transaction brings to our customers and employees.”

For the year ended December 31, 2015, Morrisey Associates reported $12.8 million in revenues. Operating income for the same period was approximately $4.4 million and the 2015 operating results included approximately $180,000 in depreciation and amortization expense.

Terms of the Transaction: HealthStream, through its wholly-owned subsidiary, Echo, Inc., acquired Morrisey Associates, Inc. for approximately $48.0 million in cash.

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