One Equity may reap 5x cash from Medex

One Equity Partners, the US private equity firm, is reported to be on the verge of posting a return of between 4.5x and 5x cash from its investment in healthcare firm Medex.

Medex, the US medical group, has agreed to be acquired by UK manufacturer Smiths Group for $925 million (€689 million). The Deal reported that One Equity Partners, which invested $119.5 million in Medex in exchange for an 83.2 percent stake in May 2003, will achieve a cash return of between 4.5 times and 5 times its initial investment when the deal completes.

Medex was formed in February 2001 from Saint Gobain Performance Plastics Corp, and went on to acquire Inhalation Plastics Inc in May 2002 and then, last year, the vascular access business of Johnson & Johnson. The company is a leading supplier of anaesthesia equipment, infusion products used in intensive care wards and safety devices such as intravenous infusion catheters. It is based in Carlsbad, California, and has a European headquarters in Duesseldorf.

London-based Smiths Group said in a statement it was paying $625 million in cash for Medex and assuming about $300 million of net debt. The target company says it expects sales of $330 million and operating profits of $59 million this year.

Banc of America Securities is acting as lead financial adviser to Medex and One Equity Partners, while Credit Suisse First Boston and Lehman Brothers are acting as co-advisers. Smiths Group is being advised by Morgan Stanley.

Established in 2001, One Equity Partners manages $3.5 billion of investments and commitments on behalf of JP Morgan Chase & Co, its parent organisation. In September 2004, the Wall Street Journal reported that One Equity may at some point raise an independent fund, in which JP Morgan would be an investor.