BC Partners Ltd., manager of a 5.8 billion-euro ($7.4 billion) private equity fund, and Silver Lake Partners of the U.S. said they agreed to buy medical-care provider Multiplan Inc.
The two firms will be “equal equity partners,” they said today in a statement, without disclosing the terms of the acquisition. They are purchasing the New York-based network of health-care providers from Carlyle Group and Welsh, Carson, Anderson & Stowe in a transaction valuing the company at $3.1 billion, said two people with knowledge of the deal.
The $1 trillion overhaul passed by Congress in March will expand coverage to 34 million uninsured Americans, while putting a premium on health-care companies that specialize in controlling medical costs, said Chip Clark, a partner at New York-based Ernst & Young LLP who advises equity firms on health- care deals.
“While nobody knows how the healthcare legislation will play out, we do know that more people will be going to the doctor, which isn’t bad for this business, ” said Jamie Rubin, a senior partner at BC Partners.
“MultiPlan today is a leader in working with all health- care industry participants to ensure that individuals receive greater choice, increased flexibility and cost effective care,” Raymond Svider, co-chairman of London-based BC Partners, said in the statement. “We look forward to helping the MultiPlan leadership team build on this foundation and continue to grow.”
BC Partners is seeking to invest the remainder of its fund before it starts raising a new pool in the second half of this year. Private equity firms are on the lookout for acquisitions again after the credit crisis froze deal making for two years. They have led $59 billion in takeovers this year, 73 percent more than in 2009, according to data compiled by Bloomberg.
Carlyle purchased Multiplan, the largest independent preferred provider organization, or PPO, in the U.S. in 2006. The company has 2,350 clients, according to Carlyle’s website.
Bank of America Corp., Barclays Plc and Credit Suisse Group AG agreed to finance the transaction, according to the statement. The financing commitment is $2 billion, according to a person familiar with the transaction, who declined to be identified because the terms are private. “Lenders like deals that are on the right side of a trend,” said Rubin. Multiplan has $1.39 billion of debt of which $1.12 billion is in term loans maturing in 2013, according to Bloomberg data.
Goldman Sachs Group Inc. and Bank of America arranged a $1.19 billion credit facility in 2006 to help pay for Carlyle and Welsh Carson’s acquisition of the company, Bloomberg data show. The loan package consists of a $50 million revolving credit line, a $425 million term loan B, a $360 million term loan C and a $350 million term loan D.
Multiplan’s revolver had an interest rate 2.25 percentage points more than the London interbank offered rate when the credit line was established in 2006, according to Bloomberg data. At the time the term loan C had a margin of 2.5 percentage points over Libor, the rate banks charge to lend to each other, and the term loan D had a spread of 4.25 percentage points more than the lending benchmark.