Madison Dearborn in $1.6bn healthcare deal

New Mountain Capital and other shareholders are selling a majority stake in Ikaria.

Madison Dearborn Partners has agreed to buy Ikaria, which provides therapies for critical care units in hospitals, for $1.6 billion, according to a statement.

Ikaria’s existing shareholders, including New York-based private equity firm New Mountain Capital, Arch Venture Partners, Venrock and 5AM Ventures, will receive a cash payment while retaining a 45 percent stake in the company.

“We look forward to working with New Mountain and Ikaria’s other investors to apply our industry resources to ensure that the company continues to grow through the delivery of its important therapies to hospitals’ critical-care units,” Madison Dearborn managing director Tim Sullivan said in the statement.

Ikaria develops and commercialises therapies that treat critically-ill patients in hospitals and intensive care units. The company’s biggest product is the only US Federal Drug Administration-approved drug for the treatment of respiratory failure in newborn infants.

As part of the deal, Ikaria is separating out most of its non-commercial products, including its research pipeline. Company shareholders will retain their stake in this pipeline, which will be pre-funded with $80 million.

Credit Suisse will lead the debt financing for the deal, which is expected to close in the first quarter of 2014.

Chicago-based Madison Dearborn invests in healthcare, business and government services, consumer, financial, telecom and media companies. Its other investments include wood-based manufacturing company Boise Cascade, IT products and services company CDW and fitness club chain LA Fitness, according to its website.

Madison Dearborn exited US-based Yankee Candle for $1.75 billion in September, Private Equity International reported. Sources familiar with the matter said the exit would generate a 2x return multiple.

Madison Dearborn has raised six funds with an aggregate capital of $18 billion. Its most recent fund launched in 2008 and closed on $4.1 billion, according to PEI’s Research and Analytics division. The firm was unavailable to comment at press time.