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Exclusive: Madison Dearborn nears $1.5 billion-plus deal for Ikaria - sources
December 23, 2013 / 11:41 PM / in 4 years

Exclusive: Madison Dearborn nears $1.5 billion-plus deal for Ikaria - sources

NEW YORK (Reuters) - Buyout firm Madison Dearborn Partners LLC is close to a deal to pay more than $1.5 billion to acquire Ikaria Inc, a specialty drug company backed by private equity and venture capital, people familiar with the matter said on Monday.

An agreement could be announced as early as this week, the people said, cautioning that negotiations had not yet been finalized and the outcome could change. The sources asked not to be identified because the sale process is confidential.

Madison Dearborn and Ikaria declined to comment.

Hampton, New Jersey-based Ikaria’s main drug INOMAX delivers nitric oxide gas to treat newborns with serious trouble breathing, allowing for more oxygenated blood to circulate in their bodies. It also has a pipeline of what it calls “critical care” products for patients with life-threatening injuries or disease.

In October, people familiar with the matter told Reuters that Ikaria, whose owners include New Mountain Capital LLC, ARCH Venture Partners LP and Venrock Associates LP, is working with Morgan Stanley (MS.N) and Credit Suisse Group AG CSGN.VX on the auction.

The auction attracted other private equity firms including GTCR LLC and American Securities LLC. Ikaria’s owners had been hoping to fetch as much as $2 billion but concerns over the company’s reliance on INOMAX and its patents weighed on its valuation.

With several of its key patents expiring this year and next, Ikaria is more vulnerable to competition, although its patents on heart failure products expire in 2029 and others expire in 2031, according to Moody’s Investors Service Inc.

The company was created in 2007 when investors led by New Mountain merged a biotechnology company also called Ikaria with German industrial gas producer Linde AG’s (LING.DE) INO Therapeutics in a $670 million cash-and-stock deal.

The deal left Linde as minority investor in Ikaria, creating a company with more than $160 million in revenue. Six years later, Ikaria had about $361 million in 12-month revenue as of the end of March 2013, according to Moody’s Investors Service Inc.

Ikaria filed for an initial public offering in 2010 but withdrew the filing that same year citing market conditions. Its owners have taken several dividends from the company, including a $475 million distribution last summer that Ikaria paid for by borrowing.

Reporting by Soyoung Kim, Greg Roumeliotis and Jessica Toonkel in New York; Editing by David Gregorio

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