European healthcare buyouts show signs of life

LONDON (Reuters) - Buyout firms are preparing for a string of deals involving European hospitals, laboratory testing firms and other healthcare services providers, lured by a sector that has proved resilient during the financial crisis.

Bidders are running the slide rule over several companies already owned by rival private equity shops, following a slew of recent so-called "secondary buyouts" in this and other sectors.

Companies for sale include: French medical testing group Laboratoire Cerba, owned by Industri Kapital, and clinic operator Medi-Partenaires, owned by LBO France, which are both being sold by Rothschild; and Scandinavian healthcare and diagnosis group Aleris, which Morgan Stanley is selling for EQT, people familiar with the matter say.

Encouraged by a thawing debt market, sellers are hoping to fetch double-digit multiples of earnings before interest, tax, depreciation and amortization (EBITDA), the people say.

Industri Kapital and LBO France declined to comment. EQT was not immediately available for comment.

Private equity firms have also approached Britain's Priory Group about a sale, after plans for a listing were shelved earlier this year, but no formal auction is underway of the mental health specialist, the people say.

The Financial Times earlier reported majority owner Royal Bank of Scotland (RBS.L) (RBS) was considering a sale. RBS declined to comment.

Aleris, with a turnover of 4 billion swedish krona ($507 million), has also attracted several buyout firms, some of which are looking to build on existing businesses in the region.

Bridgepoint BRDG.UL bought Finland's Terveystalo last year, while Triton and KKR KKR.UL snapped up Sweden's Ambea in 2010's biggest European healthcare buyout, valued at $1.15 billion.

Meanwhile, Apax APAX.UL and Nordic Capital own Capio, which operates in Sweden, Norway, France, Germany, Spain and Britain.

Other suitors for the business could include Industri Kapital, BC Partners BCPRT.UL and Advent International, with the price expected to be very full, one of the people said. First-round bids are due next week.

Capio could be combined with either Aleris or Medi-Partenaires, one of the people said, while the French firm could also interest 3i Group Plc (III.L), which in March invested in Vedici, France's No. 5 acute care company.

Cerba, which this person said could fetch about 10 times its 55 million euros in EBITDA, is likely to appeal to national buyout specialists such as Wendel (MWDP.PA) and Eurazeo (EURA.PA).

PRIORY

Priory, best known for treating errant rock stars, could appeal to large-scale buyout specialists such as Cinven CINV.UL, Permira PERM.UL, TPG TPG.UL and Apax.

Chief Executive Philip Scott also knows Blackstone (BX.N) well, having served as chief executive of former portfolio company Southern Cross Healthcare (SCHE.L).

Two of the people said Priory's EBITDA was some 90 to 100 million pounds, implying a price tag of roughly 1 billion ($1.44 billion).

Globally, buyouts of healthcare firms have leapt, compared with an almost total absence of deals in the same period last year, aided by banks' increasing willingness to lend.

Private equity firms have struck deals worth $6.05 billion in the year to date, Thomson Reuters data shows. The biggest is TPG TPG.UL and Carlyle's CYL.UL $1.5 billion bid for Australian hospital operator Healthscope HSP.AX.

But although the year's fourth-largest deal is Bridgepoint's $656 million takeover of Care UK Plc, there are few public targets for new buyouts in Europe.

Some smaller private deals are also underway.

In Norway, four regional private equity firms are competing to buy wheelchair maker Handicare from Herkules Private Equity, while in the Netherlands Bencis is selling childcare group Catalpa, banking sources have told Reuters LPC.

($1=7.878 Swedish Crown)

(additional reporting by Zaida Espana and Alasdair Reilly in London and Nina Sovich in Paris; Editing by David Cowell)