Pre-Paid Legal Services Inc., will be acquired by Mid-Ocean Partners, a NY Based Private Equity Firm by the end of July 2011.
Pre-Paid Legal Services Inc, which offers legal services for a monthly fee, agreed to sell itself to private equity firm MidOcean Partners for $650 million in cash.
The offer price of $66.50 a share represents a 9 percent premium to Pre-Paid’s Friday close of $60.26.
Pre-Paid Legal said its board unanimously approved the agreement with MidOcean on Sunday and that the transaction is expected to close on July 31.
Pre-Paid had said in October that it was evaluating a $592 million buyout offer from an unnamed private equity firm. The company has been considering merger and acquisition offers for several months.
Shares of the Ada, Oklahoma-based company closed at $65.84 on Monday on the New York Stock Exchange.
“We are excited to have MidOcean involved in our efforts to increase the awareness of our consumer and small business services,” said Harland C. Stonecipher, Pre-Paid founder and chairman. “Our entire team is excited about the future prospects of our company and continues to believe, as does MidOcean, that our products offer tremendous value.”
Pre-Paid sells subscriptions to a limited package of legal services through a multilevel marketing network of independent agents. Those salespeople earn commissions on their sales, and the sales of others they recruit.
The transaction is expected to be complete by July 31.
Pre-Paid Legal’s 2010 4th Quarter & Year-End Results
During the 4th quarter of 2010, Pre-Paid’s new sales associates enrolled decreased 54.3% to 28,160 from the 61,623 enrolled in the 4th quarter of 2009 and new memberships produced decreased 20.8% to 117,472 during the 2010 quarter compared to 148,248 for the 2009 quarter.
For the year 2010, new sales associates enrolled decreased 25.6% to 138,442 compared to 186,064 enrolled during 2009 while new memberships produced were 502,982, a decrease of 11.5% from 568,095. Active memberships decreased 4.8% during 2010 from 1,547,585 to 1,473,237. From the 3rd quarter of 2010 to the 4th quarter of 2010, active memberships decreased by 19,896 memberships.
Several leaders in the MLM Community are predicting that within 2-3 years Pre-Paid Legal will no longer be a multilevel network marketing company. Only time will tell.
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