Private equity group closes deal to buy Medline for more than $ 30 billion
A group of private equity firms have reached a deal to acquire Medline Industries Inc. that would value the medical supplies company more than $ 30 billion, in one of the largest debt buyouts since the financial crisis.
The Wall Street Journal reported earlier on Saturday that the group was close to a deal after beating a rival bid from the private equity arm of Canadian investment firm Brookfield Asset Management Inc.
Including debt, the deal would be valued at around $ 34 billion, and north of $ 30 billion excluding borrowing, people familiar with the matter said. This could potentially make it the biggest LBO ever in healthcare.
Based in Northfield, Illinois, the family-owned Medline is a little-known but major player in the medical equipment industry. It manufactures and distributes equipment and supplies used in hospitals, surgical centers, acute care and other medical facilities in more than 125 countries.
Medline’s extensive product line includes surgical gowns, examination gloves and diagnostic equipment, as well as consumer brands such as Curad bandages. Its annual revenue is around $ 17.5 billion, according to the company’s website.
Brothers James and Jon Mills founded the company in 1966 and went public in 1972. The brothers bought back the shares five years later. James’ son Charlie has been the CEO of Medline since 1997.
The family would remain the company’s largest shareholder after the takeover, and the management team would remain in place, the company said on Saturday.
The sale of Medline would be the latest sign that private equity firms have regained a taste for big buyouts. They all but disappeared after a number of them performed poorly or filed for bankruptcy following the 2008-09 financial crisis, weighed down by mountains of debt. Companies now have more than $ 1.6 trillion in unspent money, according to data provider Preqin, and that doesn’t take into account the billions that large institutional investors are clamoring for to invest directly in deals.
The fact that three private equity firms came together – they are equal partners, some people have said – dates back to an era before the crisis, when so-called club deals were common. They fell out of favor as companies generally preferred to partner with their bigger investors, but started to emerge more recently, and this deal was too important to do without partners.
As a sign of companies’ appetite for the deal, senior executives of the bidders made a pilgrimage to Medline headquarters in suburban Chicago to court family members.
The Wall Street Journal reported in April that Medline was considering a sale, likely to private equity, and had hired Goldman Sachs Group Inc.
to run the process. The winning consortium defeated a group of bidders which, during the auction, included a who’s who of the biggest buyout companies.
BDT & Co. also acted as financial advisor to Medline, and Wachtell, Lipton, Rosen & Katz as legal advisor. BofA Securities Inc., JP Morgan,
Morgan Stanley and Centerview Partners advised Blackstone, Carlyle and Hellman & Friedman, and Simpson Thacher & Bartlett LLP acted as group legal counsel.
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