EQT Equity has made its first direct investment in North America with an agreement to buy South Bend, Indiana-based healthcare performance improvement company Press Ganey, according to a statement.
EQT Equity, which is part of Stockholm-based private equity firm EQT, makes control or co-control equity investments in medium-sized to large companies, typically investing between €100 million and €600 million; in the past, EQT Equity focused on northern and central Europe. In addition to Equity, EQT – which manages about €30 billion in assets – has several other investment strategies: Mid Market, Infrastructure, Credit and Ventures.
EQT is using its seventh fund, EQT VII, to acquire all common shares of Press Ganey in a deal that values the company at about $2.35 billion. The firm will pay Press Ganey shareholders $40.50 in cash per share, a 20 percent premium to the year-to-date, volume-weighted average price and a 62 percent premium to the IPO price.
Press Ganey wants to expand internationally, and EQT will help support this both organically and through acquisitions, the statement said.
Research analysts at Robert W. Baird downgraded the company outlook to “neutral”, from “outperform”, citing the “lack of a premium” in the deal. The per-share offering price represents 16.3 times Press Ganey's 2016-forecasted EBITDA, slightly above the company's peers in the market, according to a William Blair investment research note.
Press Ganey was initially sold to New York-based private equity firm Vestar Capital Partners in 2008 by another New York-based firm, American Securities Capital Partners. The company served more than 26,000 healthcare facilities with its patient experience measurement and performance improvement solutions as of the beginning of the year.
In May 2015, Press Ganey closed its IPO at $25 per share on the New York Stock Exchange. According to the Baird report, Vestar currently owns 60 percent of Press Ganey.
The deal is expected to close during the fourth quarter, following a “go-shop” period in which others may present a bid to buy Press Ganey.
EQT VII closed in August 2015 on its €6.75 billion target, according to PEI data. The fund's investor base includes the Andrew W Mellon Foundation, Arizona State Retirement System, Hydro-Quebec Employees Pension Fund, Northwestern Mutual, and San Diego County Employees' Retirement Association, according to PEI data.
Shares of Press Ganey were trading at $41.01 per share as of 3:00 p.m. in New York, up 68 cents, or 1.69 percent, from the previous close, giving the company a market capitalisation of $2.19 billion.
Press Ganey received financial advice from Barclays and Goldman Sachs, and legal advice from Latham & Watkins and Richards, Layton & Finger. EQT received financial advice from Bank of America Merrill Lynch and legal advice from Simpson Thacher & Bartlett. Credit Suisse, Citi and BAML are providing the financing for the deal.
EQT, Vestar and Press Ganey declined to comment beyond the press release.
This story has been corrected to make clear that Press Ganey is the first direct investment in North America for EQT Equity.