US buyout firm Clayton, Dubilier & Rice has acquired medical products manufacturer Drive DeVilbiss Healthcare from backers including private equity healthcare investor Ferrer Freeman & Company.
A person with knowledge of the deal told Private Healthcare Investor the transaction was valued at around $800m million and brings CD&R’s ninth fund, a $6.4 billion vehicle, to 70 percent invested. The person said CD&R is talking with LPs about launching its tenth fund, which could target at least $8 billion.
CD&R declined to comment.
“Drive’s management team has done an exceptional job of identifying and capitalising on the increasing demand for its products across multiple channels,” CD&R Partner Richard Schnall said. “We intend to play a constructive role by supporting a very talented management team as it continues to grow the business organically and through acquisitions, pursue operational excellence and serve its customers with the highest quality products.”
Drive DeVilbiss was formed in 2015 when Ferrer Freeman merged portfolio company Drive Medical, which it acquired in 2008 and is one of the largest wheelchair manufacturers in the US, with DeVilbiss Healthcare, which makes sleep products and was acquired from private equity house Vestar Capital Partners. After this deal Ferrer became a minority owner in the combined company. Under Ferrer’s ownership Drive Medical made more than ten bolt-on acquisitions. The person confirmed the deal was a full exit for Ferrer.
In 2013 Ferrer Freeman and the companies owners recapitalised the business with a $115 million loan from GE Capital. Debt for the current deal was provided by Barclays, JPMorgan Chase Bank, Citigroup Global Markets, Capital One and HSBC.
The New York buyout house has recently bolstered its healthcare team, hiring JPMorgan’s former managing director and co-head of healthcare services Ravi Sachdev and appointing former Omnicare president and chief executive Nitin Sahney as an operating advisor.
CD&R's current healthcare portfolio includes wound care services provider Healogics and cloud-based prescription management company Vets First Choice. Previous holdings include healthcare services provider Envision Healthcare, which it exited in August 2013.
In May last year the firm sold drug compounder PharMEDium Healthcare Holdings to drug distributor AmerisourceBergen for $2.57 billion, marking over 5x money-on-money multiple. In 2013, it sold disposable medical product provider AssuraMed to Cardinal Health for over 3x multiple, according to a source familiar with the matter.
CD&R’s ninth flagship fund closed in May 2014 on $6.43 billion according to PEI data. The person PHI spoke to said the fund distributed $6 billion to LPs last year. It’s eighth fund closed in 2009 on $5 billion, one of the largest funds raised that year.
–Additional reporting by Annabelle Ju