American Dental agrees to $398M buyout deal

American Dental Partners (ADP) has agreed to be acquired and taken private by JLL Partners, a private equity investment firm, for $19 per share in cash.

The deal is valued at about $398 million, including $81 million in currently outstanding debt, according to the company.

Under the terms of the merger agreement, ADP may solicit acquisition proposals from third parties for a period of 40 calendar days from the date of the merger agreement. The merger agreement provides JLL a customary right to match a superior proposal.

If there is no superior offer, the transaction is expected to close during the first quarter of 2012, subject to customary closing conditions.

An ADP spokesperson declined to comment on what prompted the deal and whether the company expects to see competitive bids from other entities. ADP will issue a proxy in the next few days that will provide additional details about the acquisition, the spokesperson said.

However, Rigrodsky & Long, a law firm based in Garden City, NY, and Wilmington, DE, said it is investigating potential claims against the board of directors of ADP concerning possible breaches of fiduciary duty and other violations of law related to the company's agreement to be acquired by JLL.

"The investigation concerns whether American Dental's board of directors adequately shopped the company to obtain the best price possible for American Dental's shareholders before entering into the agreement with JLL Partners," the law firm stated in a press release.

In related news, ADP reported that its third-quarter profit for 2011 edged down on lower revenues, while earnings per share remained flat.

Net revenue for the quarter (end-September 30) was $70.2 million, compared with $71.1 million for the third quarter of 2010. Net earnings for the quarter were $2.7 million, compared with $2.7 million for the same quarter a year ago.

Analysts at Robert W. Baird noted that ADP had delayed releasing its third-quarter financials by two to three weeks and suggested that, in addition to the proposed acquisition by JLL, the delay may have been prompted by a lawsuit filed in late September by Riverside Dental -- one of ADP's partners -- alleging "breach of fiduciary duty."

Founded in 1995, ADP partners with U.S. dental group practices to help manage their businesses. The company is affiliated with 27 dental group practices, which have 282 dental facilities and approximately 2,400 operatories located in 21 states.