Duke Street to reap 2.5x-plus money in Medi-Globe sale to trade

The UK-based midmarket GP achieved a "significant multiple arbitrage" between entry and exit and will reap more than 2.5x returns, a source familiar with the situation told Unquote. The acquisition is expected to generate a mid-teen return on capital employed in three years and will be completed on a cash-free, debt-free basis. The consideration will be settled in cash on completion, following authority clearance in Germany and France, expected in Q4 2022, according to an announcement from the buyer.

The deal represents DCC Healthcare's largest acquisition to date and brings Duke Street's recent record to twelve trade sales out of its last fifteen exits, according to announcements from the buyer and the vendor respectively.

The GP was prepping the exit since last year and had appointed Moelis to advise on the process, Mergermarket reported. The company generates between EUR 15m and EUR 20m EBITDA and could be exceeding EUR 20m, as reported.

Duke Street invested in the business in 2016, following a two-year period of origination focussed on the medical devices sub-sector, according to an announcement from the vendor. Duke Street backed the MBO of Medi-Globe for an enterprise value in the EUR 130m-EUR 150m bracket, according to Unquote Data. The GP led the buyout alongside other investors, including DB Private Equity – through its Secondary Opportunities Fund III and other funds – as well as Atnahs Capital, Brederode and Harwood Capital. A consortium of banks namely Unicredit, HSH, Sumitomo, DZ Bank and Berenberg Bank provided EUR 68m senior debt package and EUR 10m RCF to support the transaction, as reported.

Since acquiring the business, Duke Street has backed Medi-Globe in launching new products in its core therapeutic areas, including single-use endoscopy devices for the gastroenterology, as well as in consolidating and extending Medi-Globe's international reach, according to a press release. The GP realised value prior to exiting the business via the refinancing and sale of non-core hospital supplies division Asid Bonz earlier this year to Medline International, said the source familiar.

Duke Street decided to exit Medi-Globe after delivering its operational improvement plan, the source said, adding that the business showed great resilience during the time of pandemic, which makes it attractive to buyers.

DCC Healthcare operates through two businesses, DCC Vital and DCC Health & Beauty Solutions with principal operating locations in Britain, the US, Germany and Ireland servicing domestic and international customers. Medi-Globe will enable further material expansion of DCC Vital's presence in the European healthcare market, following on from the acquisition of primary care supplier Wörner Medical in May 2021, according to the press release from the buyer. The majority of DCC Vital sales are in Britain, the DACH region and Ireland with growing sales to distributors in Europe, the Middle East and North Africa (MENA).

DCC Vital's growth strategy is principally focused on building its international presence in own-brand medical devices and in primary care supplies and services, according to the announcement. DCC Vital's existing own-brand medical devices activities are focused on the areas of minimally invasive surgery, cardiac monitoring and anaesthesia.

Most recently, Duke Street acquired Kent Pharmaceuticals and Athlone Laboratories in 2019. Earlier this year Duke Street sold Voyage Care, a provider of specialist care and support, to Wren House, the London-based global infrastructure investment manager. In May 2021, Duke Street completed the acquisition of COMPO, a European provider of bio alternative gardening products, headquartered in Muenster, Germany.

Company
Founded in 1990, Medi-Globe is a manufacturer and distributer of medical devices selling into more than 120 countries. The company focuses on single-use accessories for use in critical surgical and diagnostic procedures in the fields of gastroenterology and urology in particular. Medi-Globe had group revenues of approximately EUR 120m (GBP 104m) in 2021.

People
Medi-Globe − Martin Lehner (CEO).
Duke Street − Charlie Troup (managing partner).
DCC − Donal Murphy (CEO).

Advisers
Vendor − Moelis (corporate finance); White & Case (legal); PWC (tax DD); EY-Parthenon (commercial DD); Alvarez & Marsal (financial DD).

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• DACH
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