TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R), through their affiliated investment funds, are set to acquire healthcare technology company R1 RCM in an all-cash transaction valued at nearly $8.9bn.
R1 specialises in providing technology-based solutions that improve the patient experience and enhance the overall financial performance of hospitals, health systems, and physician groups.
An investment vehicle, currently controlled by TowerBrook, holds approximately 36% of outstanding shares of common stock, including warrants of R1 owned by TowerBrook.
As per the definitive agreement, TowerBrook and CD&R will purchase all the outstanding common stock, which are not already owned by TowerBrook, for $14.30 per share.
This offer represents a 29% premium over R1's closing price on 23 February 2024, before the initial acquisition proposal by New Mountain Capital was made public.
The latest deal has already received unanimous approval from a special committee operating under R1's board of directors, consisting only of independent directors.
This committee was established on 11 March 2024 to assess strategic alternatives.
The R1 board has approved the transaction following the committee's recommendation.
Once the deal is complete, R1's shares will be delisted from Nasdaq and it will become a privately held company.
The completion of this deal is now subject to the receipt of stockholder and regulatory approvals along with the fulfilment of certain customary closing conditions.
Expected to close by the end of this year, the acquisition will be financed through debt and equity from funds affiliated with TowerBrook and CD&R.
R1 CEO Lee Rivas said: “TowerBrook has been an outstanding long-term investor and partner to R1 and shares our vision of being the automation platform of choice for the provider industry.
“Our agreement reflects TowerBrook’s and CD&R’s confidence in our team and the unmatched scale, technology, and value we provide.”
Qatalyst Partners and Barclays are advising the special committee, with Skadden, Arps, Slate, and Meagher & Flom providing legal counsel.
Kirkland & Ellis is representing R1 in legal matters.
Centerview Partners is the lead financial adviser to TowerBrook and CD&R while Deutsche Bank and the Royal Bank of Canada are providing financing and advisory services.
Legal counsel for TowerBrook is provided by Wachtell, Lipton, and Rosen and Katz. Debevoise & Plimpton provided legal counsel for CD&R.
