Phillips-Medisize sale rumours

The Wall St Journal has reported that medical device company, Phillips-Medisize may be on the verge of leaving the hands of one venture capital group for another in what is rumoured to be an $800 million deal.

According to the report, three unnamed sources familiar with the process have confirmed that private-equity firm Kohlberg & Co., which bought Phillips Plastics Corp in 2010, has been shopping the firm around since January and a bidding war may be going on  between private-equity firms GTCR and Golden Gate Capital.

The report also says the $800 million price tag would value the company about 10 times its 2013 earnings before interest, taxes, depreciation and amortisation of $80 million. Wall St Journal says Goldman Sachs Group is managing the sale process. Phillips-Medisize employs more than 3,100 people in 14 locations across the globe. The company generates annual sales of almost $500 million, with 75% of that from products such as disposable insulin pens, glucose meters, specialty inhalation drug delivery devices, single-use surgical devices and consumable diagnostic components, according to the company.

According to the Wall St Journal, the ongoing private-equity interest in Phillips-Medisize is part of a trend of outsourcing among medical device companies to lower costs and speed new devices to market by getting help with product design, regulatory consulting, and testing and validation. Private equity is in purchase mode, with low interest rates and a more active selling environment than has been seen in recent years, though those firms typically seek to make a return on investment in four to seven years and then sell again, unlike strategic buyers looking for integration or market growth. With the global medical device market expected to pass $300 billion by 2017, Phillips-Medisize is an attractive grab.

Kohlberg combined Phillips with Medisize, a Dutch processor of medical devices and pharmaceutical packaging, forming Phillips-Medisize in 2011.