Global buyout firm Advent International will sell American Radiology Services, a company it recapitalised in March 2003, in a transaction valued at $151 million (€102 million).
The buyer is CML HealthCare Income Fund, a publicly traded Canadian income trust, which themselves have lately become buyout targets, as a recent change to Canadian law means the trusts will be subject to an additional 34 percent tax starting in 2011.
The radiology services sector is a favourite among many private equity firms due largely to its growth prospects; according to American Radiology Services, the US diagnostic industry is projected to hit $110 billion next year. Onex, Providence Equity Partners, Avista Capital Partners, Kohlberg Kravis Roberts, Oaktree Capital Management Vestar Capital Partners and MTS Health Investors are among the many firms that have been active investors in the industry.
American Radiology Services, based in Baltimore, Maryland, was founded in 1997 by the merger of four radiology practices, along with The Johns Hopkins University and The Johns Hopkins Health System Corporation as a shareholder and strategic partner.
Since Advent’s 2003 investment, ARS expanded its fixed-site operations, particularly with regard technology, and expansion of the company’s “primary or secondary services via ARS’s teleradiology network to 25 hospitals across seven states”, the company said.
“We have greatly enjoyed working with our partners over the past five years to create a leading provider of fully-integrated diagnostic imaging services,” Bob Taylor, the Advent managing partner who led the deal, said in a statement.
Advent’s financial and legal advisors on the deal were UBS and Pepper Hamilton, respectively.
Advent, which was founded in 1984, has invested in healthcare companies for two decades. In July 2007, the London-based firm expanded its life sciences team with the recruitment of two former biotech entrepreneurs, Don Drakeman and Rudi Pauwels.