21st Century Oncology joins KKR’s GenesisCare in $1.1 bln deal

The PE-backed Aussie cancer and cardiac care provider prevailed over two other parties in Jefferies-run sales process

A KKR-backed Australian cancer care company is more than doubling in size as it enters the U.S., reaching a deal to buy 21st Century Oncology for a total enterprise value of approximately $1.1 billion, PE Hub has learned.

GenesisCare, the largest provider of cancer care services in Australia and Europe, agreed to acquire Fort Myer, Florida’s 21st Century, a late Thursday announcement said.

Financial terms weren’t disclosed, but Sydney-headquartered GenesisCare said it plans to invest an additional $300 million in the U.S. over the next three years.

21st Century declined to comment on the terms of the transaction, but told PE Hub the $300 million investment would be used for upgrades, including introducing new equipment at 2.5x times faster than the current replacement rate.

For 21st Century, the deal concludes a Jefferies-run auction process, which one source characterized as competitive down to the wire, with two other finalists in the mix.

A sponsor-focused sales process kicked off in October nearly two years after 21st Century emerged from Chapter 11 bankruptcy, PE Hub previously reported.

21st Century’s estimated 2019 Ebitda is approximately $100 million, one source said, which would imply an TEV-to-Ebitda multiple of around 11x.

The KKR-backed company is buying 21st Century from debt holders including funds managed by Beach Point, J.P. Morgan Investment Management, Governors Lane, Morgan Investment Management, Oaktree Capital Management, Roystone Capital Management and HPS Investment Partners.

GenesisCare, of Brisbane, Australia, will inherit 21st Century Oncology’s 124 radiation oncology treatment centers and 170 clinical offices, bringing its network to nearly 200 centers.

GenesisCare Founder and CEO will continue to lead the combined company.

The transaction remains subject to customary regulatory reviews and is expected to close by mid-2020, the announcement said.

KKR in October 2018 reinvested in GenesisCare, reportedly acquiring a 20 percent stake in the company for A$400 million (~$283 million), with the option to invest an additional A$250 million in the company.

KKR two years earlier exited its initial investment in the company, selling its 45 percent stake to China Resources Group and Macquarie Capital at a reported enterprise value of A$1.7 billion.

21st Century, which bills itself as the largest integrated cancer care network and radiation oncology provider in the country, emerged from Chapter 11 bankruptcy in January 2018. In connection with its plans to emerge, the company trimmed its long-term debt by more than $500 million.

21st Century’s previous private equity owners are Vestar Capital Partners and the Canada Pension Plan Investment Board.

GenesisCare declined to comment, while KKR didin’t immediately return a request for comment.

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