Ontario Teachers Said to Near $1.3 Billion Heartland Deal

Ontario Teachers’ Pension Plan is nearing a deal to buy Heartland Dental Care Inc. that values the company at about $1.3 billion, outbidding traditional leveraged- buyout funds, said people with knowledge of the matter.

The Canadian retirement fund may be prepared to announce an agreement with Effingham, Illinois-based Heartland as soon as today, said the people, who spoke on condition of anonymity because the talks are private. KKR & Co. (KKR), Madison Dearborn Partners LLC, and Apax Partners LLP had also pursued an acquisition of Heartland, one of the people said.

Founded by Chief Executive Officer Richard Workman, Heartland is one of the largest U.S. dental practice management companies. It manages 370 practices in 19 states, helping dentists with personnel and back-office support, according to its website. CHS Capital, a Chicago-based private equity firm, bought a stake of undisclosed size in Heartland in 2008.

Calls to Deborah Allan, a spokeswoman for Ontario Teachers’, and Ashley Buehnerkemper, of closely held Heartland, weren’t immediately returned. Representatives of the private- equity firms declined to comment.

In addition to investing in private equity funds managed by others, Teachers, with C$117.1 billion under management as of Dec. 31, makes its own direct investments in private equity, usually alongside a buyout firm. Teachers has disclosed only two acquisitions worth more than $1 billion without a co-investor, according to data compiled by Bloomberg.

Those were the 2007 acquisition of marine container terminals in Canada and the U.S. from Oriental Overseas International Ltd. for about $2.35 billion, and the 2000 purchase of Cadillac Fairview Corp., a commercial real estate developer, for C$2.3 billion ($1.56 billion at the time).

Jefferies Group Inc. and Moelis & Co. are advising Heartland.

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

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