Pre-Paid Legal Services Inc. said it agreed to be acquired by units of the New York-based private-equity firm MidOcean Partners for $66.50 a share, or $650 million.
Pre-Paid made the Jan. 30 agreement after a unanimous recommendation of a special committee made up of independent directors of the board, the company said today in a statement distributed by PR Newswire.
“We are excited to have MidOcean involved in our efforts to increase the awareness of our consumer and small-business services,” Pre-Paid Chairman Harland C. Stonecipher said in the statement.
Pre-Paid, an Ada, Oklahoma-based company that develops and markets legal-service plans, announced on Oct. 25 that it had received an offer from a “well-known private-equity firm” to acquire all of the company’s outstanding common shares for $60 each in cash.
Pre-Paid rose $5.58, or 9.3 percent, to $65.84 in New York Stock Exchange composite trading.
According to a Jan. 19 filing with the U.S. Securities and Exchange Commission, Cerberus Capital Management LLC was in negotiations with Thomas W. Smith, the head of an investment group that holds a 25.3 percent stake of Pre-Paid about a buyout of the company.
New Investment Vehicle
The filing outlined a scenario for the acquisition in which a new vehicle could be formed to buy Pre-Paid. Smith’s group would then contribute a “significant portion” of its current Pre-Paid stake for shares in the new investment vehicle, according to the filing, thereby retaining a stake in the underlying business and lowering the amount of money Cerberus would need to raise for a buyout.
According to today’s statement, Pre-Paid made the merger agreement with MidOcean PPL Holdings Corp. and PPL Acquisition Corp., both newly created units of MidOcean Partners.
A MidOcean spokesman, Chris Tofalli, confirmed the statement announcing the acquisition and declined further comment.
The transaction must be approved by shareholders and regulators, and the companies expect to close the deal on or before July 31, according to the statement. After the purchase, Pre-Paid will be privately held and its shares no longer traded on the New York Stock Exchange, the companies said in the statement.
A Pre-Paid spokesman, Randy Harp, wasn’t immediately available for comment.