Private-Equity Firm Near Deal to Buy MultiPlan -- Update
May 03 2016 - 6:42PM
Dow Jones News
By Liz Hoffman and Dana Cimilluca
Private-equity firm Hellman & Friedman LLC is nearing a deal
to buy health-care services provider MultiPlan Inc. for about $7.5
billion including debt, in what would be one of the largest recent
leveraged buyouts.
Hellman & Friedman is in advanced talks with MultiPlan's
owner, Starr Investment Holdings LLC, according to people familiar
with the matter. A deal for MultiPlan, which processes claims for
big insurers, could come this week, they said. As always, there is
no guarantee an agreement will be reached.
It has been a fallow stretch for private-equity firms, which
have struggled to make acquisitions as a result of high valuations
and choppy debt markets.
Starr, which is part of the insurance and investment
conglomerate run by former American International Group Inc. chief
Maurice "Hank" Greenberg, paid $4.4 billion for MultiPlan in
2014.
Starr and its co-investor, Swiss asset manager Partners Group,
put up about $1.4 billion and borrowed the rest, according to one
of the people. It is the biggest-ever acquisition for Starr, which
Mr. Greenberg founded after leaving AIG in 2005.
Since Starr bought the company, Multiplan's annual earnings
before interest, taxes, depreciation and amortization have risen by
more than 50% to about $650 million, this person said.
The expected deal is set to be a big win for Starr and shows
that even amid the dearth of activity, there are still big gains to
be reaped from well-chosen private-equity buyouts. In fact,
MultiPlan, which has traded private-equity hands several times, has
been a consistent winner.
Carlyle Group LP and Welsh, Carson, Anderson & Stowe bought
the company in 2006 and sold it four years later to BC Partners and
Silver Lake for about $3 billion.
Carlyle more than tripled its money, while Silver Lake and BC
Partners more than doubled theirs, people familiar with the matter
have said.
MultiPlan was founded in 1980 as a network of New York hospitals
and is now one of the biggest independent U.S. preferred-provider
organizations. These companies organize and manage networks of
doctors and hospitals on behalf of insurers. MultiPlan counts Cigna
Corp. and Humana Inc. among its clients. It has about 900,000
health-care providers under contract and manages 40 million
insurance claims a year, according to its website.
Hellman & Friedman, founded in 1984, has raised a total of
$35 billion over the years. Notable investments it has made include
discount supermarket chain Grocery Outlet Inc., consulting firm
Wood Mackenzie Ltd. and Getty Images Inc.
Starr didn't run a traditional auction to sell MultiPlan,
according to people familiar with the matter. It had been
considering recapitalizing the business by using new debt to pay
itself a dividend when Hellman & Friedman made an offer, one of
the people said.
Write to Liz Hoffman at liz.hoffman@wsj.com and Dana Cimilluca
at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
May 03, 2016 18:27 ET (22:27 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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