Private equity firm KKR & Co has agreed to buy WebMD Health Corp in a deal valued at about $2.8 billion, bringing a slew of popular online health information websites under one umbrella. The deal comes five months after New York-based WebMD said it would explore strategic options amid a slowdown in advertising paid for by pharmaceutical companies.
KKR will fold WebMD's websites, including WebMD.com and Medscape.com, into its Internet Brands unit, which houses sites such as DentalPlans.com and AllAboutCounseling.com. KKR will pay $66.50 per share, a premium of 20.5 percent to WebMD's Friday closing and 33 percent higher than the stock's trading price at the start of the year.
WebMD's shares were trading at $65.98, just shy of the offer. Analysts said the deal price was higher than expected, adding that WebMD was a good fit for Internet Brands' portfolio. "We are pleasantly surprised by the premium valuation, given the flat growth expected," Cowen & Co analyst Charles Rhyee wrote in a note. "We think the valuation may imply that we and consensus may be too conservative." Founded in 1996, WebMD has grown into one of the most popular health websites for consumers and medical professionals, attracting more than 70 million monthly unique visitors in 2016, according to analytics company comScore Inc.
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