One of the potential bidders for Kinetic Concepts Inc. (NYSE:KCI) is the Blackstone Group, a private equity firm with a massive $16 billion buyout fund and a past history of making big bets in med-tech.
The Wall Street Journal named the New York, N.Y.-based Blackstone as being the primary bidder for KCI, which is rumored to be in play for a potential $5 billion leveraged buyout by at least two private equity firms.
Bloomberg News Service first reported the rumor this morning, saying that the San Antonio, Texas-based wound management company was in talks with two private equity firms for a deal that could be worth $5 billion. The wire service cited “people with knowledge of the matter.”
A second bidder, if there is one, has not been identified by any media outlet.
Blackstone has about$16 billion in funds specifically earmarked for the buyout market, according to Reuters news service. The fund also has a history of making some big bets in medical technology. In 2006, Blackstone paid $11 billion to acquire Biomet, Inc. and in 2007 it bankrolled a $1.6 billion buyout of DJO Inc.
Since the news hit The Street shares of KCI jumped dramatically, rising some 11 percent from yesterday’s closing price of $58.78 per share. Trading volume has also increased by several orders of magnitude to 7.5 million shares, compared to yesterday’s relatively sleepy 837,000 shares.
KCI, which was founded in 1976, makes products for wound care, bariatric and critical care markets. It pulled in just over $256 million in profit on $2.02 billion in sales in 2010.