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Montagu in $805m healthcare deal

The London-based firm fought off competition from other groups including Bain Capital.

Montagu Private Equity has agreed to buy the healthcare devices and prescription retail divisions of London-listed packaging group Rexam for $805 million.

Montagu acquired the business through an auction process, during which it fought off competition from other private equity firms including Bain Capital, according to a source familiar with the matter.

It is understood Montagu had an advantage because it previously owned part of this business, which was formed when Rexam acquired Risdon Pharma from Montagu in 2003.

Montagu declined to comment beyond the statement.

The deal is subject to consultation with the French Works Councils and approval from competition authorities, according to a statement.

France-based Healthcare Devices is a European manufacturer of plastic drug administration systems – like inhalers and insulin pens – for the pharmaceutical industry. The business operates four manufacturing plants in the US and Europe and generates annual sales of approximately $265 million.

Ohio-based Prescription Retail provides plastic vials and closures used by pharmacies in the US to deliver the exact count of pills to patients. It manufactures more than 1.5 billion vials annually.

Both businesses are operating in “attractive industries with defensive characteristics”, Montagu said in the statement.

Montagu is currently investing its €2.5 billion Montagu Private Equity IV, a 2010-vintage. In December, the firm acquired CEFS International, a wealth management business, from UBS. With the acquisition of Healthcare Devices and Prescription Retail, Montagu will have made eight investments from this fund, including BSN Medical, which it sold for €1.8 billion to EQT Partners in 2012, and ClyniSis, which it acquired from ECI Partners last July. It is unclear how far the fund is now deployed.

The investment comes after Montagu enjoyed a busy year on the exit front. In December, it sold Emitel, a Polish radio and TV broadcast infrastructure operator, to US-based infrastructure firm Alinda Capital Partners, netting the firm a return of more than 2x. It also sold Host Europe, ghd, Hansen Protection, Unifeeder, ADB and BNS Medical, for an average return of 2.5x. As a result of these exits, Montagu has returned nearly €2.2 billion to investors in the last 18 months, PEI reported in December.