DealBook: Apax Leads $6.3 Billion Buyout of Kinetic Concepts

8:28 p.m. | Updated

A consortium of private equity funds led by Apax Partners agreed on Wednesday to buy a medical therapy company, Kinetic Concepts, for $6.3 billion in the largest buyout since the financial crisis.

The group, which also includes the pension funds Canada Pension Plan Investment Board and the Public Sector Pension Investment Board, are paying $68.50 a share for Kinetic. It represents a 21 percent premium over the one-month average price before news of the deal was first reported.

The Kinetic buyout tops the $5.3 billion acquisition of Del Monte Foods by a group of investors, including Kohlberg Kravis Roberts, earlier this year.

Still, it is a far cry from the heady days of the boom. In July 2007, Blackstone Group paid roughly $26 billion for Hilton Hotels, according to Dealogic.

Based in San Antonio, Kinetic, which reported revenue of $2 billion last year, provides treatments for wounds and tissue regeneration. It has been an active area for private equity deal makers. The industry’s cash flows are relatively stable, allowing firms to easily borrow.

Avista Capital Partners and Nordic Capital paid $4.1 billion for Bristol-Myers Squibb’s ConvaTec unit, in the largest buyout of 2008. The same year, One Equity Partners acquired Johnson Johnson’s business, renaming the company Systagenix.

The Kinetic deal is expected to close in the second half of the year, subject to regulatory and shareholder approval.

Investors controlling 11 percent of the company, including the founder, James R. Leininger, have committed their stakes to the deal.

The private equity group hired Morgan Stanley as a financial adviser and raised debt financing from Morgan Stanley, Bank of America Merrill Lynch and Credit Suisse.

Simpson Thacher Bartlett acted as legal counsel on the deal, while Kirkland Ellis provided legal advice on the financing.

Kinetic is being advised by J. P. Morgan Securities, and Skadden, Arps, Slate, Meagher Flom and Cox Smith Matthews are acting as legal counsel.

Article source: http://feeds.nytimes.com/click.phdo?i=d31a423477e7f236d1873a14900f0477