Kinetic Concepts Inc. (KCI), the wound- care company that agreed last month to a $5 billion leveraged buyout, received a higher takeover offer from competitor ConvaTec Inc., said two people familiar with the offer.
ConvaTec, owned by private-equity firms Nordic Capital and Avista Capital Partners LLC, has letters supporting the bid from Goldman Sachs Group Inc. and Jefferies Group Inc., said the people, who asked not to be identified because details aren’t public. The letters say the banks are “highly confident” financing for the transaction is available, the people said.
The rival offer is a bet on the resilience of the capital markets, as costs for U.S. leveraged buyouts this month reached the highest level since December. Last month’s $68.50-a-share deal to take Kinetic private was already destined to be the largest leveraged buyout since Lehman Brothers Holdings Inc. collapsed in 2008.
Apax Partners, a London-based private equity firm, and two Canadian pension funds agreed July 12 to buy Kinetic for about $6.5 billion, including assumed debt, and said they would borrow as much as $5 billion to do so. Bank of America Corp., Credit Suisse Group AG and Morgan Stanley are helping finance the deal.
Under the terms of the agreement with the Apax group, Kinetic could actively solicit other offers for 40 days, a period that ends today at 11:59 p.m. in New York.
Kinetic, led by Chief Executive Officer Catherine Burzik, received about 70 percent of its $2 billion in revenue from the wound-treatment business last year. The company, based in San Antonio and founded more than 30 years ago, also makes hospital beds and tissue-regeneration products used in surgeries.
Kinetic fell 0.9 percent to $65.37 on the New York Stock Exchange on Aug. 19. The shares have risen 56 percent this year.
Kevin Belgrade, a spokesman for Kinetic, didn’t immediately return a phone call and e-mail today. Nimisha Savani, a spokeswoman for Skillman, New Jersey-based ConvaTec, didn’t immediately return a call to her office outside regular business hours or an e-mail message.
Andrea Rachman, a Goldman Sachs spokeswoman, and Mary Ann Ranalli, of Jefferies, declined to comment. An Avista spokesman didn’t immediately return calls seeking comment.
Avista had been considering a joint bid for Kinetic with Bain Capital LLC, which pulled out of talks, people with knowledge of the matter said last week. Those people said the bidders were in financing talks with Deutsche Bank AG and Citigroup Inc. as well as Goldman Sachs and Jefferies.
Stockholm-based Nordic and Avista bought ConvaTec from Bristol-Myers Squibb Co. for $4.1 billion in 2008.
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