Apax, KKR, Madison Dearborn bid for Heartland Dental -sources

NEW YORK Tue Oct 23, 2012 4:15pm EDT

NEW YORK Oct 23 (Reuters) - Private equity firms KKR & Co , Apax Partners and Madison Dearborn Partners are bidding for Heartland Dental Care Inc, one of the largest U.S. dental practice management companies and which could be worth around $1.3 billion, according to people familiar with the matter.

The buyout firms submitted final bids on Monday for Heartland Dental, which has been exploring a sale after hiring investment banks Jefferies and Moelis earlier this year, the people said.

Heartland Dental, in which Chicago-based private equity firm CHS Capital Partners has a stake, has about $120 million in annual earnings before interest, tax, depreciation and amortization and could be sold for 10 to 12 times EBITDA, Reuters reported previously.

Representatives for KKR, Apax and Madison Dearborn declined to comment. CHS and Heartland, based in Effingham, Illinois, did not immediately respond to requests for comment. The people familiar with the matter asked not to be identified because the process is not public.

Heartland Dental manages more than 350 affiliated dental practices in 19 U.S. states, providing dentists with administrative services such as personnel staffing, purchasing, and financial, marketing and technology support, according to its website.

The company is partly owned and operated by founder and Chief Executive Rick Workman, a dentist. CHS Capital made a minority equity investment in 2008 for an undisclosed sum.

Workman is expected to stay on as CEO as part of the sale, according to one person familiar with the matter. A third of the company is owned by the CEO, a third by the employees, and another third by CHS Capital, the person added.

On Monday, another healthcare services company, CHG Healthcare Services Inc, agreed a sale to private equity firms Leonard Green & Partners LP and Ares Management LLC. The deal was valued at $1.2 billion, according to one person familiar with the matter.