Genealogy website operator Ancestry.com agreed to be acquired for $1.6 billion by a group led by Europe-based private equity firm Permira Advisors LLC, four months after it put itself up for sale following the cancellation of a TV show based on its research.
The company, whose website helps users trace their family roots, will be taken private at $32 per share, a 10 percent premium to the stock's Friday closing price of $29.18.
Shares of the company rose to $31.49 in early trading on the Nasdaq on Monday. They have risen 17 percent since June 5 when the company said it was looking for a buyer.
Being owned by private equity and having a much smaller base of owners puts Ancestry.com in a better position to achieve long-term growth, BMO Capital Markets U.S. analyst Edward Williams said. "The reality of their business model is it allows for excess volatility in shares," Williams said.
The company, which sponsored the U.S. version of the popular British series "Who Do You Think You Are?", suffered a blow in May when NBC decided not to renew the show for a fourth season.
The show, built around tracing celebrities' family histories through Ancestry.com's databases, was a major driver of new subscriber additions for the website. Ancestry.com, which went public in 2009, has about 2 million paid subscribers.
The Provo, Utah-based company had hired Frank Quattrone's Qatalyst Partners in June to find a buyer.
Ancestry.com received offers in August from three private equity firms, including Permira, but none of the bidders met the company's price expectations at the time.
Sources had told Reuters earlier this month that Permira had emerged as the front-runner to buy the company.
The Permira-led buyout group includes the private equity firm's co-investors, members of Ancestry.com's management, including Chief Executive Tim Sullivan and Chief Financial Officer Howard Hochhauser, and Spectrum Equity, which is the largest shareholder in the company with a 30 percent stake.
Spectrum will exchange $100 million worth Ancestry.com shares for shares of the buying group -- Global Generations International Inc and Global Generations Merger Sub -- the company said in a filing.
Sullivan and Hochhauser will also exchange or roll over a "substantial majority" of their stakes for equity securities in the buying group.
Sullivan held a 5.2 percent stake, according to an April 11 regulatory filing.
Spectrum Equity declined to comment on the deal.
Barclays, Credit Suisse Securities, Deutsche Bank, Morgan Stanley and RBC Capital Markets have agreed to provide financing of up to $1.02 billion for the deal, Ancestry.com said.
The company will have to pay a termination fee of $37.8 million if it accepts another offer. If the buying group terminates the agreement, it will have to pay Ancestry.com $75.6 million.
The deal is Europe-based Permira's fourth in the United States in 12 months. It previously acquired technology-based student assessment firm Renaissance Learning, automated material handling solutions provider Intelligrated, and software maker Genesys.
(Reporting by Sruthi Ramakrishnan in Bangalore and Simon Meads in London; Additional reporting by Siddharth Cavale; Editing by Sriraj Kalluvila and Ted Kerr)