The Advisory Board Company (ABCO) announced that it has entered into a definitive merger agreement to sell its health care business to Optum, a health services company that is part of UnitedHealth Group (UNH), and a definitive purchase agreement to sell its education business to affiliates of Vista Equity Partners, an investment firm. Stockholders of the company would receive estimated cash per share of $54.29, which includes a fixed amount of $52.65 per share and the after-tax value at closing of the company's 7.6% stake in Evolent Health (EVH), which has been estimated as of August 28. Total merger transaction value, including the after-tax proceeds for the sale of the education business, is approximately $2.58B. Prior to the closing of the merger of the health care business with Optum, affiliates of Vista will acquire the company's education business, including Royall & Company, for $1.55B, subject to customary adjustments. Following the closing of the education transaction, the company's health care business will merge with Optum for $1.3B, including the assumption of The Advisory Board Company's debt. All of the outstanding shares of common stock of the company will be converted into the right to receive $52.65 per share in cash plus an additional cash amount per share based on the after-tax value of the company's stake in Evolent at closing. Such additional amount will fluctuate between signing and closing. Based on the closing trading price of Evolent's Class A common stock on August 28, stockholders would receive total cash consideration per share of approximately $54.29 in the merger, representing a premium for stockholders of approximately 50% to the closing price of the company's common stock on the NASDAQ on January 11, which was the last trading day prior to the public disclosure of a significant minority investment in the company. The Board of Directors of The Advisory Board company unanimously approved the merger agreement and has recommended that the company's stockholders adopt the merger agreement. The merger is expected to close by the end of 2017 or in early 2018 and is contingent on the approval of the company's stockholders. The merger is subject to the satisfaction or waiver of certain other closing conditions, including U.S. antitrust clearance and the closing of the sale of the education business. It is not subject to a financing condition. Elliott Management has agreed to vote its shares in support of the merger at the upcoming stockholder meeting.
