R1 RCM, a healthcare IT service provider, has agreed to an $8.9 billion take-private with TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R), following overtures from an activist investor.
The all-cash transaction will result in shareholders receiving $14.30 per share, an 11% premium over the last closing price. Investment funds affiliated with TowerBrook and CD&R will provide debt financing and equity.
TowerBrook, which already held a 36% stake, will acquire the outstanding common stock along with CD&R and develop the company’s revenue management capabilities using generative AI.
The deal comes amid a relative lull in healthcare IT PE deals, with PitchBook’s Q1 2024 Healthcare IT Report showing deal activity in Q1 2024 down 14.8% from Q4 2023.
The Utah-based company was valued at approximately $6 billion in a recent take-private proposal from New Mountain Capital, another major shareholder.
R1 RCM went public in May 2010, with a debut stock price of $12 per share. In the past 12 months the stock price has fallen around 20%.
The company focuses on improving the financial performance of healthcare providers through strategies including enterprise solutions, revenue recovery and revenue optimization.
R1’s financial advisers included Qatalyst and Barclays, with Skadden, Arps, Slate and Meagher & Flom, as well as Kirkland & Ellis, serving as legal advisers.
TowerBrook and CD&R recruited Centerview Partners, Deutsche Bank, and Royal Bank of Canada as financial advisers. Wachtell, Lipton, Rosen & Katz and Debevoise & Plimpton LLP served as legal counsel to TowerBrook and CD&R, respectively.
Featured image by Roberto Machado Noa/Getty Images
