Online publisher Bankrate Inc. said Wednesday it has agreed to be sold to New York-based private-equity firm Apax Partners for $571 million.
North Palm Beach, Florida -based Bankrate (Nasdaq: RATE, $28.65), which runs Bankrate.com, is the target of one of the largest private-equity deals of the year. Apax's offer, valued at $28.50 a share, would take Bankrate private.
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In its decade as a publicly traded company, Bankrate shares languished on the dot-com scrap heap, then soared as Bankrate.com took advantage of the growing popularity of Internet advertising.
Even so, Bankrate acknowledged Wednesday that the recession has hurt its advertising revenue. Bankrate said it expects to report a second-quarter profit of $1.9 million, down from $4.1 million a year ago. Second-quarter revenue will dip to $31 million from $40 million a year ago.
The sale to Apax is scheduled to close by the end of September.
"Apax's offer represents attractive value to our shareholders, while also giving us significantly enhanced flexibility to execute on our long-term strategy in a difficult economic climate," Bankrate President and Chief Executive Thomas R. Evans said.
Apax's $28.50 offer represents a premium of 15.8 percent over Tuesday's closing stock price and 18.2 percent over the average closing price for the previous 10 trading days.
Bankrate shares jumped $4.03, or 16.4 percent, on Wednesday and closed at $28.65, just above the value of Apax's offer. That suggests some investors think another bidder could emerge. Bankrate said it has agreed to pay Apax $30 million to end the deal if it gets a richer offer.
Bankrate's largest shareholder is Chairman Peter Morse of West Conshohocken, Pa. The deal values his 4.04 million shares at $115 million.
As of February, Bankrate had 277 employees spread out among offices in North Palm Beach, New York and Chicago, the company said in its annual report.
Apax plans no layoffs or management changes as a result of the deal, Bankrate Senior Vice President Bruce Zanca said.
Apax partner Mitch Truwit said he was attracted to Bankrate because of its position as an Internet leader in consumer finance.
"We are delighted to have the opportunity to work with Bankrate's management team in a private setting to expand their platform," Truwit said in a statement.
Bankrate's board approved the sale, which is subject to regulatory approvals.
The deal underscores Bankrate's dramatic turnaround. The company went public in 1999 amid the tech bubble, yet its shares went straight down. Bankrate hit an all-time low of 19 cents a share in December 2000.
It appeared near the top of a Barron's list of likely-to-fail dot-coms and was even delisted from the Nasdaq exchange. In recent years, though, Bankrate has produced consistent profits and has been buying smaller firms.
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