Deal of the week: ConvaTec

It’s somewhat unexpected during a credit crunch to see a multi-billion-dollar buyout of a U.S. target, with a U.S. sponsor and U.S. bank leading the debt financing.

But that was the case when Bristol-Myers Squibb agreed to sell its ConvaTec unit for $4.1 billion to Avista Capital Partners and Nordic Capital, with fully committed leveraged financing led by JPMorgan. Other participating banks include Bank of Ireland, General Electric, HVB and DKW. ConvaTec makes therapeutic products for wound care and ostomy care (ostomies are surgically-created openings for the discharge of body wastes).

The deal is noteworthy because of the number of U.S. players. Sure it’s around a 50/50 leverage ratio, but this is still something that’s not supposed to happen during the credit crunch. The basic explanation is that ConvaTec is an established business with high cashflows and low cyclicality.

Plus, you had a motivated seller in Bristol-Myers, which is trying to move most of its non-pharma assets.

It’s more a one-off than a roadmap, but is still a welcome sign for the lethargic LBO market. —Dan Primack