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The Boston Globe (January 15, 2008) has reported that Bain Capital Partners will take over the currently publicly-held Bright Horizons Family Solutions Inc., the Watertown corporate child-care provider that Bain helped start 20 years ago. According to the story...

"Under terms of the agreement, Bain Capital will pay Bright Horizons stockholders $48.25 for each share of stock, a 47 per cent 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....

"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 ... 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....

"'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.

However, an Australian news agency, The Australian had a different spin on this transaction. Its story read (in part)...

"An affiliate of the private equity firm founded by White House candidate Mitt Romney is paying $US1.3 billion ... for a leading U.S. childcare provider that has been in the sights of Australia's ABC Learning.... ABC currently operates more than 1000 childcare centres in the U.S. after taking over the Learning Care Group, the La Petite Group, and Childrens Courtyard. But ABC's founder and chief executive, Eddy Groves, has foreshadowed that it sees strong future growth in the U.S., and Bright Horizons represented one of the few opportunities for a quick build-up of childcare centres....

"ABC, which has accumulated a huge war chest for further U.S. acquisitions, has 60 days to better the offer.... Not surprisingly, a special committee of the Bright Horizons board comprised entirely of independent directors has recommended the offer to shareholders, but the full board has said it will explore the market for better offers while the deal sits on the table.

"Last year, Mr Groves raised more than $1 billion in capital to continue the takeover strategy that has made him the world's biggest childcare provider and one of Australia's richest men.... But with a recession looming in the U.S. and evidence that enrolments are already starting to decline, Mr Groves might find it hard to justify the price he would have to pay, especially after his acquisition strategy was criticised last year for its negative impact on earnings per share.

"The flipside of the argument is that Bright Horizons is debt-free and recorded net income growth of 10 per cent and revenue growth of 12 per cent in the first nine months of last year. Bain Capital, founded by Mr Romney in 1984, has arranged financing for the takeover �" which came as a major surprise given that only last Friday Bright Horizons acquired Lipton Corporate Child Care Centers, a company that operates more than 100 childcare centres in New York, Washington DC, New Jersey, Virginia, and Pennsylvania."

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The January 2008 issue of Exchange magazine included the "21st Annual Status Report on For Profit Child Care: Challenges and Opportunities in Early Childhood" This report, which can be read in its entirety on the home page of www.ChildCareExchange.com, contains the views of the CEOs of North America's three largest child care organizations, KinderCare Learning Centers, Bright Horizons, and the Learning Care Group.

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