KKR recruits Bain for Accellent purchase

Kohlberg Kravis Roberts and Bain Capital have completed a $1.27 billion acquisition of medical device maker Accellent. When the deal was first announced, Bain was not mentioned as part of the buying group.

Kohlberg Kravis Roberts and Bain Capital have completed a $1.27 billion purchase of Accellent, buying the company from a team of Denver-based KRG Capital and DLJ Merchant Banking Partners. KKR originally locked up the deal in mid-October, but brought Bain in after it had already won the auction for the medical device manufacturer.

According to a source close to the transaction, KKR led the deal and maintains a 71 percent stake in the business. Bain controls a 24 percent piece of Accellent, and management rolled over a 5 percent holding.

Accellent is based in Wilmington, Massachusetts. It provides contract manufacturing and design services to medical device makers in the cardiology, endoscopy and orthopaedic markets. According to a KRG press release, the company logged approximately $100 million in pro forma EBITDA for the 12 months trailing September 30, on sales of $472 million.

For KRG and DLJ, the sale represents a profitable exit for the pair. KRG formed Accellent (formerly UTI Corp.) in 1999, when it reportedly invested $80 million in the rollup of four medical device companies. After more companies were added onto the platform, DLJ was brought in last year to help fund another add-on, the $230 million acquisition of MedSource Technologies, which included a $89 million equity investment from DLJ. The company has since added two other acquisitions.

In a statement, KRG indicated that the sale yielded a 3x return on its original equity investment in Accellent.

Credit Suisse First Boston ran the auction for the sellers, while law firm Hogan & Hartson provided legal advice. KKR was advised by JP Morgan on the financial side and Simpson Thacher & Bartlett provided counsel.