NEW YORK (CBS.MW) — EBenX agreed Monday to be acquired by SHPS, Inc, and a quick look at the numbers makes it clear the move will benefit shareholders in the Minneapolis-based administrator of health and welfare benefits.
shares gained more than 139 percent on news that it has agreed to a lucrative merger with SHPS, a private company owned by Welsh, Carson, Anderson & Stowe. Shares also benefited from news of a breakeven operating performance in the third quarter.
As part of the deal, EBenX’s shareholders will receive $4.85 a share in cash for each EBenX stock they own, representing a 146 percent premium over Friday’s closing price. Shares closed Friday at $1.97, and have been in the doldrums recently, setting a 52-week low of $1.50 on Oct. 14.
Based on the 20.1 million diluted shares outstanding at the end of September, the deal values EBenX at roughly $97.5 million.
The stock jumped $2.73, or 138.6 percent, to finish the session at $4.70. Volume totaled about 5.2 million shares, well beyond the issue’s daily average of 54,500.
Completion of the deal is expected in the first quarter, subject to regulatory and shareholder approval.
“The complementary service offerings and technologies of our two companies will result in significant market benefits both for existing customers, and purchasers and suppliers of employee benefits and health care in general,” John Davis, EBenX’s president, said in a press release.
“In return for creating that company, we believe our shareholders are receiving significant value versus the recent trading price of EBenX,” he said.
The name of the combined company will be SHPS. David Garner, SHPS’s president and CEO, will head it up.
For the third quarter, EBenX posted a pro forma profit of $65,000, breaking even on a per share basis. These results, which exclude amortization of intangibles and stock-based compensation, beat the average estimate of three analysts polled by Thomson First Call for a loss of 3 cents a share.
Including items, the company lost $585,000, or 3 cents a share, in the quarter, much narrower than its year-ago loss of $9.3 million, or 47 cents a share.
Revenue surged to $13.8 million in the three months ended Sept. 30 from $9.1 million in the same period a year earlier. EBenX also said that it remains on track for operating profitability in the fourth quarter.
View more information: https://www.marketwatch.com/story/ebenx-soars-on-merger-plans-breakeven-results