(Reuters) - Advisory Board Co said it would sell its healthcare business to UnitedHealth Group Inc’s Optum unit and education business to private equity firm Vista Equity Partners, for a total deal value of $2.58 billion.
Shares of the company, which was targeted by activist fund Elliott Management, rose 6.2 percent to $52.95 in morning trading on Tuesday.
The company, which provides research and software tools as well as consulting services to healthcare and education firms, said it would sell its education business for $1.55 billion and its healthcare business for $1.3 billion, including debt.
The sale of the education business is expected to close by the end of this year or in early 2018, after which Advisory Board will merge its healthcare unit with Optum, the company said.
Insurer UnitedHealth’s Optum business, which manages drug benefits and offers healthcare data analytics services, will also acquire Advisory Board’s equity interest in healthcare technology provider Evolent Health Inc.
“It’s a smart, congruent and synergistic acquisition (for UnitedHealth),” Mizuho Securities analyst Sheryl Skolnick wrote in a note.
The combined deal would give Advisory Board’s shareholders about $54.29 per share in cash, including a fixed amount of $52.65 per share and the after-tax value of its 7.6 percent stake in Evolent, at closing.
Advisory Board said in February it would explore options, including a sale of part or the entire company, after activist fund Elliott Management said the company’s stock was “significantly undervalued”.
Elliott had a nearly 5 percent stake in the company as of June 30, according to Thomson Reuters data. On Tuesday, Advisory Board said Elliott agreed to vote in favor of the deals.
“Given that the company went through a detailed - and fairly lengthy - sales process, we do not believe that other bidders will emerge for the asset,” William Blair analyst Ryan Daniels said in a client note.
Goldman Sachs & Co and Allen & Co were financial advisers to Advisory Board, while Skadden served as legal adviser.
Evercore and Macquarie Capital were the financial advisers to Vista Equity Partners, while Kirkland & Ellis LLP was its legal adviser.
Reporting by Divya Grover in Bengaluru; Editing by Arun Koyyur