Patterson Companies Announces Definitive Agreement to Sell Its Medical Business to Madison Dearborn Partners
ST. PAUL, Minn.--(BUSINESS WIRE)--
Patterson Companies, Inc. (Nasdaq:PDCO) today announced a definitive
agreement to sell its medical business (Patterson Medical) to Madison
Dearborn Partners (MDP), a leading private equity firm based in Chicago,
for gross proceeds of approximately $715 million in cash. The sale is
expected to close in the fiscal second quarter, following the
satisfaction of regulatory requirements and other customary closing
According to Scott P. Anderson, chairman and chief executive officer of
Patterson Companies, "Patterson's strategy for growth is to focus our
resources and investments on building our dental and animal health
businesses. We believe that the medical business will thrive under the
new ownership that is dedicated to driving growth in the rehabilitation
market. We received a strong offer from MDP. We are also enthusiastic
about MDP's commitment to support Patterson Medical's customers and
employees going forward. We believe that the medical business is solid,
with a strong product portfolio and a dedicated employee group, and is
well-positioned for future success."
Earlier this year, Patterson Companies announced that it had retained
BofA Merrill Lynch to explore the potential sale of the medical
business. Today's announcement is the outcome of that process. In fiscal
2015, sales and EBITDA for the medical segment were $464.2 million and
$67.2 million, respectively. Patterson intends to apply the net proceeds
from the sale of its medical unit to reduce the debt it incurred to fund
the previously announced acquisition of Animal Health International, Inc.
"The acquisition of Animal Health International and divestiture of
Patterson Medical are transformational moves for Patterson Companies and
a key component of our strategic intent to take a broadened view of our
markets," continued Anderson. "We believe that we can accelerate returns
on invested capital and increase shareholder value by focusing on our
closely aligned dental and animal health units. By concentrating our
efforts, we believe we have created the size and scale necessary to
build on our success in our chosen markets."
MDP has a long history of successfully investing in health care across a
range of sub-sectors including health care distributors such as VWR
International, specialty pharmaceuticals and medical products,
hospitals, home and community-based care, skilled nursing facilities and
life sciences. The firm's recent investments include Ikaria, Kaufman
Hall, Option Care and Sage Products. Over the past 30 years, the
principals of MDP have focused on investing in companies in partnership
with outstanding management teams to achieve significant long-term
appreciation in equity value.
"We are pleased to partner with the exceptional management team at
Patterson Medical," said Tim Sullivan, a managing director at MDP. "MDP
has extensive experience investing in health care distribution companies
and corporate carve-outs, and we plan to utilize our resources and
expertise to support Patterson Medical's U.S. and international growth.
Patterson Medical is a leader in its field with strong competitive
advantages and we look forward to supporting the team as they execute
the next stage of the company's growth."
Patterson Medical's current management team, led by its president, Mike
Orscheln, will work closely with the MDP team to execute the many growth
opportunities it will have under its new independent ownership
structure. Upon completion of the sale to MDP, the business will
continue to operate as Patterson Medical for a transition period before
rebranding as part of its independence from Patterson Companies.
Patterson Companies also announced that beginning with the fiscal 2016
first quarter, results of Patterson Medical will be classified and
reported as discontinued operations. As such, current and historical
results will be excluded from core EPS and organic sales trends.
Patterson Companies added that it plans to update fiscal 2016 guidance
for core EPS on its fiscal first quarter earnings call scheduled for
August 27, 2015.
In connection with the transaction, BofA Merrill Lynch acted as
financial advisor and Briggs and Morgan, PA acted as legal advisor to
Patterson Companies. MDP was advised by Barclays and Deutsche Bank.
Kirkland & Ellis acted as legal advisor to MDP. Deutsche Bank will lead
the debt financing related to the transaction along with Barclays, BofA
Merrill Lynch and Jefferies.
About Madison Dearborn Partners
Madison Dearborn Partners (MDP), based in Chicago, Illinois, is a
leading private equity investment firm in the United States. Since
Madison Dearborn's formation in 1992, the firm has raised six funds with
aggregate capital of over US $18 billion and has completed approximately
130 investments. MDP invests in businesses across a broad spectrum of
industries, including health care; basic industries; business and
government services; consumer; financial and transaction services; and
telecom, media and technology services. Notable health care investments
include Option Care, Sage Products, Kaufman Hall, Sirona Dental, Team
Health, and VWR International. For more information, please visit www.mdcp.com.
About Patterson Companies, Inc.
Patterson Companies, Inc. is a value-added distributor serving the
dental, animal health and rehabilitation supply markets.
As Patterson's largest business, Patterson Dental provides a virtually
complete range of consumable dental products, equipment and software,
turnkey digital solutions and value-added services to dentists and
dental laboratories throughout North America.
Animal Health Market
Patterson Animal Health, formerly Patterson Veterinary, is a leading,
full-line distributor in North America and the U.K. of animal health
products, services and technologies to both the production-animal and
Patterson Medical is the world's leading distributor of rehabilitation
supplies and non-wheelchair assistive patient products to the physical
and occupational therapy markets. The unit's global customer base
includes hospitals, long-term care facilities, clinics and dealers.
This press release contains certain forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are information of a non-historical nature
and are subject to risks and uncertainties that are beyond Patterson's
ability to control. Forward-looking statements generally can be
identified by words such as "believes," "expects," "anticipates,"
"foresees," "forecasts," "estimates" or other words or phrases of
similar import. Similarly, statements that describe the proposed
transaction, including its financial impact, and other statements of
management's beliefs, intentions or goals also are forward-looking
statements. It is uncertain whether any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them
do, what impact they will have on the results of operations and
financial condition of the divested companies or the price of Patterson
stock. These forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially from
those indicated in such forward-looking statements, including but not
limited to the ability of the parties to consummate the transaction and
the satisfaction of the conditions precedent to consummation of the
transaction, including the ability to secure regulatory approvals at all
or in a timely manner and the other risks and important factors
contained and identified in Patterson's filings with the Securities and
Exchange Commission, such as its Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K, any of which could cause actual results to
differ materially from the forward-looking statements. Any
forward-looking statement in this press release speaks only as of the
date on which it is made. Except to the extent required under the
federal securities laws, Patterson does not intend to update or revise
the forward-looking statements.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150701005774/en/
Patterson Companies, Inc.
Ann B. Gugino, 651-686-1600
Vice President & CFO
For Madison Dearborn Partners:
Chuck Dohrenwend or Kate Schneiderman, 212-371-5999
Source: Patterson Companies, Inc.
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