Cinven buys Phadia in €1.28bn secondary buyout

Cinven, a European buyout firm, has acquired Phadia, a Swedish in-vitro allergy diagnostics business, in a €1.285bn (US$1.65bn) secondary buyout.

The vendors were PPM Capital, a UK private equity firm, and Triton, a German private equity manager. The firms originally acquired Phadia in April 2004 in a US$575m transaction from Pfizer, which had bought the business from pharmaceutical manufacturer Upjohn in 2003.

PPM Capital and Triton carried out a refinancing of Phadia in September 2005 that returned slightly more than 100% of the total originally invested, according to data from PPM. Neither PPM or Triton were immediately available for comment.

Debt was provided for Cinven’s acquisition by Royal Bank of Scotland, Bayerische Hypo and Vereinsbank, and UBS. Subject to regulatory clearance, the deal is expected to be completed in January 2007.

Freshfields Bruckhaus Deringer, KPMG and Candesic advised Cinven. PPM and Triton were advised by Morgan Stanley, Bain, PricewaterhouseCoopers, Clifford Chance and Vinge. UBS managed the auction, which reportedly included bids from rival private equity firms Blackstone Group and Charterhouse Capital Partners.

“With the ownership change, there will be a much smarter focus on top-line growth, especially the under-penetrated market in the US,” said Stuart McAlpine, a partner at Cinven. “We will be addressing that by increasing investment in the expansion of the sales force.”

McAlpine said that Phadia’s 75% market share made it “tricky” in terms of bolt-on acquisitions, adding that “there are adjacent areas in allergy testing where can make acquisitions, but we have nothing lined up yet”.

He said that the investment would be made from Cinven’s fourth fund, which closed with €6.5bn of commitments in June this year.

Based in Uppsala, Phadia develops, manufactures and markets blood-testing systems to support clinical diagnosis and monitoring of allergies and auto-immune diseases. The business has more than 3,000 laboratories in 60 countries and more than 1,164 employees. Phadia generated revenues in excess of €220m in 2004, according to PPM.

Phadia is not the first healthcare business to pass between PPM and Cinven. In July 2000, Cinven sold Oxoid Group, a UK diagnostics company that it acquired for £85m in 1997 from Unilever, to PPM for £109m. The business was subsequently sold to Fisher Scientific International for €270m in 2004.

PPM’s other healthcare investments include Mueller & Weygandt, a German dental mail order distribution business, and Sterigenics, a US contract sterilisation and ionisation company.

The UK pharma sector has been active in the past month. Today, UK listed contract sterilisation services provider Isotron reiterated its rejection of a hostile takeover offer from Synergy Healthcare on the grounds that the offer was unacceptably low and had no commercial logic.

Isotron said that, based on Synergy’s 12-month average share price, the implied share offer value was 549p, a significant discount to the 797.5p trading price at which Isotron shares closed on Wednesday. Isotron shares were trading at 787p at 12pm BST today.

In October, Pfizer acquired UK DNA-vaccines company PowderMed, owned by financial buyers including Advent Venture Partners and Abingworth Management, for a reported US$400m.