Apax Partners To Use All Equity In $571M Bankrate Deal
Apax Partners has agreed to acquire personal-finance Web site Bankrate Inc. in a $571 million deal that is especially notable because it is all equity.
Apax's offer of $28.50 a share was a 16% premium over Tuesday's closing price, although Bankrate's stock traded above the offer price as recently as last month. At 4 p.m. Wednesday in Nasdaq Stock Market composite trading, its shares were up 16%, or $4.03, at $28.65, indicating that investors think a higher bid might be coming. The stock is down 25% this year.
Bankrate got its start about 30 years ago as a print publisher of the newsletter Bank Rate Monitor, and through 1996 it was primarily a print publication business. In 1996, it started up Bankrate.com, and has built up its online operations over time, including with several acquisitions in 2008. The site now offers articles and tools that help consumers find such information as mortgage or CD rates.
The company generates revenue through advertising sales, lead generation, distribution arrangements, and traditional media avenues such as syndication of editorial content and subscriptions. Because many of its customers are in the financial sector and have been hard-hit by turmoil there, its revenue and income have suffered during the economic downturn.
Indeed, simultaneous to its announcement of the deal with Apax, Bankrate said its second-quarter financial numbers will be below predictions. It estimated profit dropped 54% to $1.9 million, or 10 cents a share, from $4.1 million, or 21 cents a share, a year earlier. It said revenue fell 23% to $31 million. Analysts had estimated earnings would be 30 cents a share on revenue of $37.5 million, according to a poll by Thomson Reuters.
Nonetheless, its traffic is up as consumers have been becoming more careful about their financial choices - it had nearly 72 million unique visitors in 2008, up from nearly 60 million in 2007, according to Omniture.
Kenneth B. Marlin, managing partner of Marlin & Associates, an investment bank that focuses on technology and media companies, said Bankrate has a strong position in its sector, and should be well-positioned to benefit as the economy begins to improve.
"We've always been impressed by Bankrate," said Marlin. "It is well managed and has achieved scale in this market. It has a clear leadership position in the sector, and for this reason, it has the ability to attract premium advertisers and charge premium rates."
However, Marlin said he doesn't anticipate many more transactions like this one, simply because there aren't many companies that have the scale Bankrate does.
Apax is well-versed in media and financial services deals, with other companies in its portfolio including b2b publisher Incisive Media and U.K. trade publisher emap. The firm couldn't be reached for comment.
The firm plans to begin a tender offer for Bankrate's shares no later than July 28. Bankrate's board unanimously approved the transaction.
- With reporting by Shasha Dai and Kathy Shwiff
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