- A group of private equity companies is purchasing medical supply giant Medline Industries in what is reportedly the biggest leveraged buyout in a decade.
- Blackstone, Carlyle and Hellman & Friedman have agreed to acquire Northfield, Ill.-based Medline for more than $30 billion, according to multiple media reports. The transaction is worth as much as $34 billion including debt, and includes a $17 billion equity check, according to Bloomberg.
- The deal is expected to be completed late this year. Medline says it is the largest privately held manufacturer and distributor of healthcare supplies like gowns, wheelchairs and exam tables in the U.S., with 2020 revenue of $17.5 billion.
Medline began exploring a potential sale in April, and the medical supply company quickly attracted a large pool of bidders. Since then, the number of interested parties — at least eight last month, per Bloomberg — winnowed down to just three in June, including another consortium led by Bain Capital, before Blackstone's group nabbed the deal, beating out a rival bid from Brookfield Asset Management, a Canadian investing firm.
Singapore's sovereign wealth fund, GIC, is also investing in Medline as part of the deal.
Medline was founded by the billionaire Mills family in 1966, and went public in 1972 before the family bought the shares back five years later, over concerns its stock was being undervalued.
After the transaction closes, Medline will remain a privately held company. The Mills family will remain the largest single shareholder, and there will be no changes to Medline's senior management team, which includes CEO Charlie Mills; his cousin, Andy Mills, who is president; and Andy’s brother-in-law Jim Abrams, the chief operating officer, according to a statement on Saturday.
The mammoth deal signals investors' appetite for megadeals may be rising after a long lull in large leveraged buyouts following the 2008 financial crisis. The buyouts, which involve one or multiple companies taking on significant amounts of debt to acquire another company, largely disappeared following the recession.
Between 2005 and 2007, private equity firms cinched 18 deals valued at $10 billion or above, according to Dealogic data cited in the Wall Street Journal. Since then, there have only been 10, prior to Medline.
But a recent string of proposed or ongoing LBOs, including at Dutch telecommunications company Royal KPN and Japan's Toshiba Corp., suggest the lull is coming to an end. And for Medline, the deal ensures a reliable source of capital amid an especially risky time for global supply chains.
Medline said it plans to use the new capital to expand its product offerings, accelerate international expansion and invest in its global supply chain infrastructure. The company, which manufactures and distributes medical equipment used in hospitals and other care settings in over 110 countries, has spent much of the past few years building out its capabilities.
In early May, the company finished a three-year capital expenditure campaign, investing $1.5 billion in new distribution centers, manufacturing capabilities and IT upgrades.
Medline plans to invest an additional $500 million in 2021, including opening seven medical-grade distribution centers this year. One location, in Grayslake, Illinois, is estimated to be the largest distribution center of its kind in the world.