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Gores Group realises 10x return on Therakos

The firm has made a record gain through the $1.3 billion sale of the immunotherapy company to Mallinckrodt.  

The Gores Group has made a 10x return on its $1.3 billion exit from immunotherapy company Therakos in a sale to Mallinckrodt Pharmaceuticals, according to sources familiar with the deal.

The California firm acquired the company three years ago for an undisclosed sum from former J&J division Ortho-Clinical Diagnostics. The investment was made with equity from its $2.1 billion, 2011-vintage Gores Capital Partners III fund.

“It’s the largest gain in the history of the firm,” Ed Johnson, managing director of The Gores Group, told Private Equity International. He declined to comment on the specifics of the transaction.

Therakos’ immune cell therapy is used by hospitals for treating diseases such as Graft Versus Host disease, Crohn's disease and other conditions.

Johnson said when Gores bought the immunotherapy business it had 100 employees and was generating about $120 million in sales and roughly $42 million of EBITDA. The private equity group then hired two healthcare executives, Michael Rechtiene to serve as chief executive of Therakos and Sandra Thompson as its chief operating officer. When Gores sold the company its turnover had grown to $200 million and its EBITDA to $100 million in EBITDA, Johnson said.

Gores hired Credit Suisse and Jefferies in March to manage a dual track process to exit its investment through a private sale or initial public offering. In August, it agreed to sell Therakos to Mallinckrodt for $1.3 billion.

Kirkland & Ellis provided legal advice to Gores.