CD&R in advanced talks to buy Healogics

Target: Healogics Inc

Price: $1 billion

Sponsor: Metalmark Capital Holdings LLC

Buyer: Clayton, Dubilier & Rice LLC

Financial Adviser: Goldman Sachs Group Inc

CD&R has so far outbid other private equity firms in the auction for Healogics, including TPG Capital LP and a consortium of Ares Management LP and Leonard Green & Partners LP, the people told sister news service Reuters.

The sources, who spoke on condition of anonymity because the negotiations are private, cautioned that a final agreement with CD&R had not yet been reached and that one of the other private equity firms could still come back with a higher offer.

Representatives of Healogics, CD&R, Metalmark and TPG declined to comment, while representatives of Ares and Leonard Green did not respond to requests for comment.

Jacksonville, Florida-based Healogics and its affiliated companies partner with more than 550 hospitals in the United States to provide wound care services and treat about 200,000 patients annually, according to its website.

Reuters reported in January that Metalmark had tapped Goldman Sachs Group Inc to explore a sale of Healogics. In 2011, Healogics was created with the merger of two companies—National Healing Corp and Diversified Clinical Services.

Metalmark received a majority equity stake in the combined company by buying Diversified Clinical Services from another private equity firm, The Jordan Company. Metalmark had acquired a majority stake in National Healing in 2008.

The potential sale of Healogics underscores private equity’s interest in wound care. Large industry peer Kinetic Concepts Inc, a maker of medical devices used in wound care, was taken private in 2011 for $6.3 billion by a consortium composed of Apax Partners LLP and Canadian pension funds.

Citigroup Inc divested New York-based Metalmark last year as the bank sought to comply with the Volcker Rule, which limits investment bank investments in illiquid asset classes.

Greg Roumeliotis and Soyoung Kim are correspondents for Reuters in New York.