Hellman & Friedman Reach Deal to Buy MultiPlan

Private-equity firm Hellman & Friedman LLC has reached a deal to buy health-care services provider MultiPlan Inc.

MultiPlan's owner, Starr Investment Holdings LLC, will retain a minority investment in the company on behalf of its clients, MultiPlan said in a news release Thursday.

News of the deal, and the $7.5 billion price, was earlier reported by The Wall Street Journal. Starr and Hellman & Friedman didn't disclose terms.

"We are pleased to be partnering with Hellman & Friedman, an experienced investor in both health care and technology, and look forward to our next chapter with them," MultiPlan Chief Executive Mark Tabak said in the release.

It has been a fallow stretch for private-equity firms, which have struggled to make acquisitions as a result of high valuations and choppy debt markets. Starr, which is part of the insurance and investment conglomerate run by former American International Group Inc. chief Maurice "Hank" Greenberg, paid $4.4 billion for MultiPlan in 2014.

Starr and its co-investor, Swiss asset manager Partners Group, put up about $1.4 billion and borrowed the rest, according to a person familiar with the matter. It was the biggest-ever acquisition for Starr, which Mr. Greenberg founded after leaving AIG in 2005.

Since Starr bought the company, MultiPlan's annual earnings before interest, taxes, depreciation and amortization have risen by more than 50% to about $650 million, the person said.

The deal is a big win for Starr and shows that even amid the dearth of activity, there are still big gains to be reaped from well-chosen private-equity buyouts.

In fact, MultiPlan, which has traded private-equity hands several times, has been a consistent winner.

Carlyle Group LP bought the company in 2006 and, alongside Welsh, Carson, Anderson & Stowe, sold it four years later to BC Partners and Silver Lake for about $3 billion.

Carlyle more than tripled its money, while Silver Lake and BC Partners more than doubled theirs, people familiar with the matter have said.

MultiPlan was founded in 1980 as a network of New York hospitals and is now one of the biggest independent U.S. preferred-provider organizations. These companies organize and manage networks of doctors and hospitals on behalf of insurers.

MultiPlan counts Cigna Corp. and Humana Inc. among its clients. It has about 900,000 health-care providers under contract and manages 40 million insurance claims a year, according to its website.

Hellman & Friedman, founded in 1984, has raised a total of $35 billion over the years. Notable investments it has made include discount supermarket chain Grocery Outlet Inc., consulting firm Wood Mackenzie Ltd. and Getty Images Inc.

Starr didn't run a traditional auction to sell MultiPlan, according to people familiar with the matter. It had been considering recapitalizing the business by using new debt to pay itself a dividend when Hellman & Friedman made an offer, one of the people said.

As part of the transaction, Singapore's sovereign-wealth fund GIC and Leonard Green & Partners will invest alongside Hellman & Friedman. Barclays, Goldman, Sachs & Co. and Simpson Thacher & Bartlett are advising Hellman & Friedman. J.P. Morgan Securities LLC and Kirkland & Ellis LLP are advising MultiPlan and the seller, MultiPlan said in its release.

Write to Liz Hoffman at [e-mail] and Dana Cimilluca at [e-mail]

(END) Dow Jones Newswires

May 05, 2016 18:15 ET (22:15 GMT)

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