Healthcare sector comment – April 2011

Date

April saw an encouraging month for deals in the healthcare sector with a total of 14 deals completed.

The key deal this month was The Priory’s acquisition of Craegmoor, where both assets, interestingly, are owned by Advent International. Earlier this year Advent was one of a handful of buyers in discussion with Care Management Group as a possible merger with Craegmoor. However, Advent decided to hold off from any further acquisitions, preferring to consolidate its own portfolio by bringing The Priory and Craegmoor together to exploit the clear synergistic benefits. Over the next twelve months you will see more mid-tier learning disability and mental health care businesses coming to market. Private equity will continue to show an interest in these assets and lead the consolidation with only a limited number of trade buyers.

Another deal in the spotlight this month was the recent announcement that J&J has agreed to acquire Synthes for $21.3 billion, which is the biggest purchase in the company’s 125-year history. Synthes already has 50% of the market for screws, plates, bone grafts and other products to treat skeletal injuries. J&J will now become the leader in the $5.5 billion market for devices that treat trauma victims.

Deals

The Practice Plc has acquired six health centres from UnitedHealth Primary Care for an undisclosed amount. The Practice currently runs 50 GP practices in the UK. UnitedHealth UK has decided to focus its attention on providing commissioning support services to help the NHS meet its £20bn efficiency savings target.

Prism Medical has acquired Movement2 Limited for an undisclosed amount. Prism Medical provides patient moving and handling equipment. Movement2 also supplies the ceiling track hoist market along with the supply of moving, handling and bathing products. The acquisition gives Prism Medical additional strength and resources to reinforce its existing operations and greater presence within the Midlands region of the UK.

The consortium led by Dr Harry Brünjes, which previously built Premier Medical Group, has acquired Dr Newman’s Clinic for £1.6m. Dr Brünjes’ consortium plans to open up to a dozen clinics over the next few years in locations such as Birmingham, Brighton, Cardiff, Exeter and Southampton and aims to take annual revenues to £20m. Dr Newman’s Clinic treats spider veins on the face and legs at clinics in Bolton, London and Glasgow.

Active Assistance has acquired Qura Brain Injury Services for an undisclosed sum. Active Assistance provides complex and clinical care services for adults and children. Qura, based in Cornwall, provides domiciliary care for people with acquired brain injuries.

Capita Group Plc has acquired the government and healthcare units of public sector consultancy Tribal for £15.9 million. Capita provides an integrated range of white collar, professional support services on long-term contracts. Tribal’s health business includes services in clinical coding, health informatics, support for GP commissioners, disease management and estates and facilities planning.

Nordic Capital Fund VII has acquired The Binding Site Corporation Limited for an undisclosed amount. The Binding Site is a privately-owned specialist diagnostic company based in the Midlands.

Enara Group Limited has acquired four domiciliary care businesses: Care Providers (AD) Limited, Complete Care Services, Country View Homecare Services and TLC Care for an undisclosed amount. Enara is an August Equity portfolio company providing domiciliary care services.

Synergy Health Plc has acquired BeamOne LLC for a consideration of $55m. Synergy Health is a UK based company engaged in the provision of outsourced healthcare support services and contract sterilisation services. BeamOne is a US based company engaged in sterilisation of medical devices, pharmaceuticals, and other related product lines. The acquisition of BeamOne will enable Synergy Health to expand its operations in Asia and China.

Allied Healthcare Group has acquired ScotHomecare for £2.5m from Health & Lifecare Options. Allied Healthcare is a staffing and domiciliary care business and the acquisition would make it the largest domiciliary care provider in Scotland. ScotHomecare has nine branches in Scotland and one branch in Leicester. It provides domiciliary care services for the elderly and adults with physical disabilities.

The Priory Group has acquired Craegmoor Healthcare for an undisclosed amount. The Priory is the largest mental health and rehabilitation provider. Craegmoor provides mental hospitals and specialist educational institutions. The Priory will become the market leader in mental healthcare, specialist education, autism and learning disability with the acquisition of Craegmoor.

City and County Healthcare Holdings Limited has acquired Careline for an undisclosed sum. City and County is a domiciliary care business backed by Sovereign Capital. Careline provides domiciliary care services in the north-east of England, servicing contracts outsourced by local authorities in Newcastle, South Tyneside and Northumberland.

SuperGen Inc has acquired Astex Therapeutics Limited for an approximate consideration of $104m. SuperGen is a listed US based pharmaceutical company that develops and commercialises drug candidates in oncology and hematology. Astex Therapeutics was a UK based pharmaceutical company focuses on the discovery and development of products in the therapeutics areas of oncology and anti-virals.

Sinclair Pharma Plc has acquired IS Pharma Plc for an undisclosed amount creating a business worth £120m. Sinclair Pharma the UK listed company provides skin and mouth disease pharmaceutical products. IS Pharma provides and specialises in hospital medicines in the areas of critical care, neurology and oncology. They have both agreed to merge and form a new entity named Sinclair IS Pharma Plc.

Atlas Copco AB has acquired the Medical gas solutions business of Penlon Limited for an undisclosed consideration. Atlas Copco AB the listed Sweden based group is engaged in developing and manufacturing electric and pneumatic tools, compressed air equipment, construction and mining equipment, and assembly systems. Penlon is a UK based company that develops, manufactures, and distributes products and systems for anesthesia, intubation, oxygen therapy, and suction control systems.