NEW YORK (Reuters) - Bright Horizons Family Solutions Inc BFAM.O, a provider of employer-sponsored child care and early education, said on Monday it would be bought by private equity firm Bain Capital for $1.3 billion.
The deal highlights a major shift going on in the private equity sector, where the credit crunch and lending squeeze are causing big buyout firms to borrow less and chase smaller deals.
Bright Horizons shares rose 34 percent to $44.07 on the Nasdaq.
The deal also shows how even in the midst of the crunch, Bain Capital is signing up deals while many of their rivals have sat on the sidelines since the summer. Bain signed a deal with health care company Quintiles Transnational Corp late in December and agreed -- with a Chinese partner -- to buy network equipment maker 3Com Corp COMS.O for $2.2 billion in September.
Bain will pay $48.25 per share, a 47 percent premium over Bright Horizons’ closing share price on Friday.
The deal has a 60-day “go-shop” period, in which Bright Horizons can solicit other bids.
Debt financing for the deal was provided by Goldman Sachs Credit Partners L.P. and GS Mezzanine Partners V L.P., two divisions of investment bank Goldman Sachs Group Inc (GS.N).
Bain will pay $640 million of its own cash and borrow $850 million from Goldman, according to a filing. When the credit markets were frothy before the summer’s subprime mortgage meltdown, private equity firms often borrowed around 70 percent or more of a company’s asking price.
Bright Horizon’s earnings before interest, taxes, depreciation and amortization (EBITDA) last year was $75 million, according to Reuters data. EBITDA, a measure of cash flow, is a key figure for buyout firms as they need cash to pay down debt borrowed for deals.
Bright Horizons said there is no financing condition for Bain to complete the transaction. Goldman and Evercore Partners Inc (EVR.N) advised Bright Horizons on the deal.
Boston-based Bain is among the world’s biggest private equity firms, currently investing a roughly $10 billion buyout fund.
Bright Horizons, headquartered a few miles away in Watertown, Massachusetts, manages more than 600 early-care and family centers in the United States, the United Kingdom, Ireland and Canada.
Reporting by Michael Flaherty; Editing by Andre Grenon