Bain Capital Partners yesterday said it planned to take over Bright Horizons Family Solutions Inc., the Watertown corporate child-care provider that Bain helped start 20 years ago.
The $1.3 billion transaction comes about six months after Bright Horizons lost its biggest client, Ford Motor Co., which accounted for more than 3 percent of its revenue, and after it reported underperforming centers in Colorado and the United Kingdom. The third quarter of 2007 was the first time Bright Horizons had a year-over-year decline in operating margin since going public in 1998.
Under terms of the agreement, Bain Capital will pay Bright Horizons stockholders $48.25 for each share of stock, a 47 percent premium over the closing share price on Jan. 11, and Bright Horizons will be privately held. The deal is expected to close in the second quarter.
"We believe the transaction, which has the support of our executive team and our founders, will allow us to pursue the opportunities we have to grow and enhance the quality of the education and services we provide," Bright Horizons chief executive David Lissy said yesterday in a statement.
Bright Horizons declined to comment further. Bain Capital managing director Andrew Balson, in a statement, said, "Bain Capital will fully support Bright Horizons in continuing to deliver on its well-established reputation for providing employers and parents with the highest-quality child care, early education, and work/life solutions. We look forward to working with the company's proven and experienced management team to continue to build on their important mission and track record for growth."
Bright Horizons began in 1986 with about $2 million that Roger H. Brown and his wife, Linda Mason, raised from relatives, private investors, and Bain Capital. Over the next decade, the couple, who declined to comment yesterday, turned Bright Horizons into the world's leading provider of employer-sponsored child care, early education, and worklife solutions, operating more than 600 early care and family centers in the United States, the United Kingdom, Ireland, and Canada.
Brown, who graduated from the Yale School of Management and worked at Boston consulting firm Bain & Co., left Bright Horizons in 2004 to serve as president of the Berklee College of Music. He still sits on Bright Horizons' board as president, and Mason serves as board chairman. Together, the couple has 96,000 shares, worth about $4.63 million under the Bain deal.
Bright Horizons, consistently ranked among America's best employers by publications such as Working Mother and Fortune, generated nearly $700 million in revenue in 2006.
Over the past two years, Bright Horizons has made several acquisitions to expand its services, including College Coach, a higher-margin business that offers college preparation services to employees' children, and Back-Up Care Advantage, a program that provides employees back-up day care services for children and elders.
Bain's takeover of Bright Horizons will allow the mature company to make longer-term investments and grow other divisions without being subject to the whims of Wall Street every quarter, according to analysts. Moreover, operating privately could cushion blows if the economy moves into a recession and some of its biggest clients in the financial services sector decide to cut back on child-care options, said Amy Junker, an analyst with Robert W. Baird & Co. in Milwaukee.
"It's a classic example of a company being more free to do what it needs to do to make investments and not be in the public eye of the markets," Junker said of the deal.
Bright Horizons stock jumped on news of the acquisition yesterday, closing at $44.86, up nearly 37 percent.
Jenn Abelson can be reached at abelson@globe.com.
