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 conditions.
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.
Dental Market
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 companion-pet markets.
Rehabilitation Market
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20150701005774/en/
Patterson Companies, Inc.Ann B. Gugino, 651-686-1600Executive
Vice President & CFOorFor Madison Dearborn Partners:Abernathy
MacGregorChuck Dohrenwend or Kate Schneiderman, 212-371-5999
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