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Bain to Buy Bright Horizons for $1.3B

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BY MARK JEWELL | January 14, 2008 01:45 PM EST | AP

BOSTON — Bright Horizons Family Solutions Inc. said Monday it will be taken private in a $1.3 billion purchase by Bain Capital Partners LLC, which agreed to pay a hefty premium for the provider of child-care services to employers.

Shares of Bright Horizons soared by more than a third in midday trading, to the stock's highest level since the company recorded disappointing earnings in October.

Boston-based Bain will pay $48.25 per share in cash for Bright Horizons, a 47-percent premium over its closing price of $32.79 on Friday. The companies expect the deal to close within the second quarter, when shares of Horizons would cease trading under its new private ownership.

Before then, Bright Horizons said its board will try to seek other potential buyers over the next 60 days to see if other parties might be willing to make a bid higher than Bain's.

Bright Horizons Chief Executive David Lissy said the acquisition will allow the company to "grow and enhance the quality of the education and services" it provides.

The 22-year-old, Watertown-based company manages more than 600 child-care and early education centers in workplaces in the U.S., Canada, and Great Britain. Bright Horizons counts among its clients 95 companies on Fortune magazine's list of the largest 500 U.S. companies.

Andrew Balson, a managing director at Bain, cited Bright Horizons' "well-established reputation for providing employers and parents with the highest-quality child care, early education and work/life solutions."

Balson said Bain would work with Bright Horizons' "proven and experienced management team."

In midday trading, shares of Bright Horizons rose $11.20, or 34 percent, to $43.99. The shares last traded at that level in mid-October.

The gain more than erased the 20-percent drop in the stock after Bright Horizons in mid-October reported its third-quarter earnings would fall short of Wall Street expectations. The company cited lower-than-expected enrollment gains at some of its child care centers.

BMO Capital Markets analyst Jeffrey Silber said in a research note that Bright Horizons' stock likely "would have continued to be under pressure should investors continue to believe the U.S. is headed for a near-term recession."

For last year's first nine months, Bright Horizons' net income rose 10 percent to $33.9 million, or $1.26 a share, on revenue of $581 million.

Bain has made private equity investments in more than 300 companies since its founding in 1984.