Platinum unloads SourceOne

Platinum Equity has agreed to sell SourceOne Healthcare Technologies to Merry X-Ray Corp., ending months of speculation over the fate of the company.

After months of speculation, Platinum Equity has reached a deal to exit Ohio-based SourceOne Healthcare Technologies, selling the imaging equipment company to Merry X-Ray Corp. No terms of the deal were disclosed.

The sale marks the end of an almost three-year holding period for Platinum Equity, which launched the diagnostic imaging platform in late 2003. The Beverly Hills-based firm created SourceOne when it acquired the healthcare products group of Philips Electronics NV in November 2002, and merged that business in early 2003 with the diagnostic imaging business of PSS World Medical. There was no mention of a purchase price in the Philips deal, but to acquire the PSS subsidiary, Platinum paid $45 million in cash and assumed $71 million in liabilities from the division, according to a statement at the time.

SourceOne is a great example of how Platinum Equity creates value in the businesses we acquire.

Johnny Lopez, executive vice president, Platinum Equity

Since February of this year, there have been published reports indicating that Platinum had been looking to sell the company, although a spokesman for Platinum publicly denied those stories.

Platinum’s investment in SourceOne came before the firm had raised its debut third-party fund, the 2004-vintage, $700 million Platinum Equity Capital Partners LP. Capital for investments prior to the fund’s formation came out of Platinum founder Tom Gores’ personal fortune.

In commenting on the deal, Platinum executive vice president Johnny Lopez categorised the investment as an operations play for the firm. In a statement, he said, “SourceOne is a great example of how Platinum Equity creates value in the businesses we acquire…We integrated two competitors seamlessly, and focused on operational efficiency without sacrificing customer service.”

Platinum did not comment on its return on the investment, other than to say it was able to achieve a “substantial multiple”. Other public reports have indicated that the sale of SourceOne would have likely been valued around $150 million in value, although no confirmation on an exact purchase price was provided. Houlihan Lokey Howard & Zukin reportedly advised Platinum on the sale.

Emails to a Platinum spokesman were not returned by press time.