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Kinetic Concepts' LifeCell acquisition may include convertible debt
By Rebecca Melvin
New York, April 7 - Kinetic Concepts Inc.'s $1.7 billion acquisition of LifeCell Corp. may include a convertibles offering in 2008 as part of the San Antonio-based medical technology company's permanent financing of LifeCell, according to a company news release on Monday.
The offering will be made subject to market conditions, the release said. No further information on the potential convertible offering was available as Kinetic Concepts did not immediately return phone calls from Prospect News.
Kinetic Concepts, which designs and makes advanced wound care and therapeutic support products, said it has agreed to pay $1.7 billion, or $51 a share, to acquire LifeCell. The price represents an 18% premium over Friday's share price of Branchburg, N.J.-based LifeCell.
Kinetic Concepts will use cash on hand and proceeds from debt financing from Bank of America and JPMorgan Chase Bank for the acquisition. The bank financing includes syndicated term loans and a revolving credit facility.
Kinetic Concepts and LifeCell had combined EBITDA in excess of $500 million in 2007, and Kinetic Concepts expects to rapidly pay down debt.
J.P. Morgan Securities Inc. acted as financial adviser to Kinetic Concepts, and Merrill Lynch & Co. acted as financial adviser to LifeCell.
Kinetic Concepts said it believes substantial opportunities exist to leverage adjacent technologies and global infrastructure to drive meaningful revenue synergies and expects a reduction of certain general and administrative expenses.
LifeCell's primary product is AlloDerm, which is used to repair damaged tissue in hernias and breast reconstruction.
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