Bankrate agrees to $571 million offer from Apax Partners

By David Sedore, Palm Beach Business.com

NORTH PALM BEACH — Bankrate Inc., the internet publishing company based in North Palm Beach, has agreed to be bought by a New York-based private investment firm for about $571 million.

Under the agreement, Apax is offering $28.50 in cash for each outstanding Bankrate shares. The offer price represents a 5.8 percent premium over Tuesday's closing stock price and 18.2 percent over the average closing price for the previous ten trading days.

Bankrate shares closed Wednesday at $28.65, up $4.03, or 16.37 percent, the 11th biggest percentage gain on the Nasdaq composite index. Its high for year: $41.92 reached on January 2.

Shareholders representing about 24 percent of Bankrate's outstanding shares have agreed to deal.

"Apax's offer represents attractive value to our shareholders, while also giving us significantly enhanced flexibility to execute on our long-term strategy in a difficult economic climate," CEO Thomas R. Evans said in a statement. "Apax Partners has a proven track record of investing in successful, growing companies, and we are excited about this partnership."

Said Mitch Truwit, a partner at Apax: "We are very attracted to Bankrate's position as a leading online consumer finance website and we are delighted to have the opportunity to work with Bankrate's management team in a private setting to expand their platform. Furthermore, we are delighted to be investing in a company that straddles two of our core investment sectors, media and financial services."

Under terms of the deal, Apax will issue a tender offer for outstanding Bankrate shares no later than Tuesday. The deal is expected to close by the end of the quarter.

Bankrate does have the right to terminate the deal if a better offer comes along, but it likely would have to pay Apax a $30 million termination fee if it decides to do so, according to documents filed with the Securities and Exchange Commission. The deal is also subject to regulatory approvals.

Bankrate was formed in 1976 by the late Robert Heady, a Massachusetts resident who published Bank Advertising News. In the early 1982s, when Congress deregulated bank interest rates, Heady, who had by then moved to Palm Beach County, launched Bank Rate Monitor to cover loan rates, credit card rates, savings rates and a variety of bank fees.

Bank Rate became the authoritative source on interest rates, supplying data to newspapers and television networks throughout the country, regularly quoted in The New York Times, Wall Street Journal and CNN.

In 1993, Pennsylvania businessman Peter Morse, a former FAO Schwartz chairman bought the firm. Morse took the company public and still serves on its board. He owns better than 21 percent of Bankrate and stands to make $115 million from the deal, according to the company's current proxy statement filed with the SEC.

In a separate release also issued today, Bankrate announced preliminary second quarter fiscal 2009 results.

Also Wednesday, Bankrate preliminary second quarter results show that profit fell to $1.9 million, or 10 cents a share, from $4.1 million, or 21 cents, a year before. Revenue fell to $31 million from $40.2 million.

“Macroeconomic conditions have continued to impact financial advertising, particularly in our banking, mortgage and credit card channels,” Bankrate CEO Evans said. “The softness in the financial service advertising sector has been a major contributor to our recent results. Consequently, we believe that revenue … for the year will be well below the current consensus estimates.”

Bankrate will release its full financial second quarter 2009 results on July 30.