Apax Partners may have a rival for its sweetheart, Kinetic Concepts Inc. (NYSE:KCI), after news broke that KCI rival ConvaTec Inc. trumped the private equity player’s $6.3 billion bid for the wound care giant.
The news sent KCI shares up more than 2 percent overnight, after a Bloomberg report yesterday that ConvaTec, owned by PE firms Nordic Capital and Avista Capital Partners LLC, topped Apax’s $68.50-per-share offer.
Citing "two people familiar with the offer," the news service said ConvaTec is armed with letters backing its bid from Goldman Sachs Group Inc. and Jefferies Group Inc., indicating that the banks are “highly confident” that ConvaTec can come up with the financing for the deal.
Apax and a pair of Canadian pension funds agreed July 12 to buy KCI for a 6 percent premium over its closing price that day. The London-based PE firm and its partners plan to finance the buyout with about $5 billion in debt, backed by lenders Bank of America Corp., Credit Suisse Group AG and Morgan Stanley. If true, the ConvaTec bid would just beat the expiration of a 40-day "go-shop" period during which KCI could solicit other offers.
Avista had been mulling a joint bid for KCI with Bain Capital LLC before Bain pulled out of the talks. The Boston-based PE titan withdrew over concerns about obtaining financing and about the price of the deal.
Despite leveraged buyout costs reaching a year-long high, the days of the LBO might be back – the Apax deal would be the largest such deal since before the fall of Lehman Brothers sent the global economy into a tailspin in September 2008 (Nordic and Avista bought ConvaTec from Bristol-Myers Squibb Co. for $4.1 billion that year).