Swedish private equity firm EQT's first American buyout isn't coming cheap.
The firm on Tuesday agreed to buy Press Ganey, a company that helps health-care providers survey patients, for around $2.35 billion. The price tag represents a steep multiple of 16.7 times Press Ganey's estimated 2016 earnings before interest, taxes, depreciation and amortization, or 14.9 times its forecast 2017 Ebitda. That's well above the median multiple paid in recent leveraged buyouts, but it can be justified in part by Press Ganey's projected double-digit earnings growth.
For shareholders, EQT's offer represents a premium so narrow to Press Ganey's closing price Monday that it rounds to zero percent -- but the stock is already trading near record levels. Still, the shares surged as much as 4 percent above EQT's bid, indicating investors are hopeful that another suitor may emerge during the pending "go-shop" period or that they may be able to squeeze a few more cents out of the Swedish firm.
With cheap deal financing at the ready for rival strategic and private equity suitors, nothing is impossible.
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