- BX combined ReAble and DJO in $1.6 bln ’07 deal
- Transformation plan to drive 7-10 pct cost savings by year-end
- DJO: $313 mln adjusted Ebitda for year ended June 30
Blackstone Group is evaluating the sale of DJO Global more than a decade after investing in the provider of everything from knee braces to reconstructive joint replacements, five sources said.
DJO retained Goldman Sachs for financial advice, two of the sources said.
The process is in its early stages, sources indicated.
Given its size and scale, the Vista, California, company ought to command looks from large buyout firms, though interest from strategics is unlikely, one of the sources added.
DJO offers a variety of orthopedic products for rehabilitation, pain management and physical therapy. The company is divided into four segments: bracing and vascular, surgical implant, recovery sciences and international.
Blackstone’s investment in DJO dates to 2007, when the buyout firm bought and merged the company with an existing portfolio company, ReAble Therapeutics (formerly Encore Medical).
The deal was valued at about $1.6 billion. DJO’s common stock ceased trading on the NYSE as a result, though its debt remained rated.
DJO in August reported second-quarter results, posting about $313 million in adjusted Ebitda for the 12 months ended June 30, accounting for future annual run-rate savings from its previously announced business-transformation plan.
A deal is likely to command a multiple of Ebitda below 10x, one of the sources speculated.
The transformation initiative, announced in March 2017, remains on track to produce cost savings of 7 percent to 10 percent by the end of 2018, DJO said.
In 2017, DJO generated $294 million in adjusted Ebitda on total revenue of about $1.2 billion.
Prior to the transformation initiative, the company in 2015 refinanced its debt by issuing $1.045 billion of second-lien senior secured notes.
Founded in Carlsbad, California, in 1978 by then Philadelphia Eagles offensive-line captain Mark Nordquist and local lawyer Ken Reed, the company was initially named DonJoy after their wives, Donna and Joy, the company states on its website.
DJO in recent years has seen reshuffling in the C-suite, including the 2016 appointments of Brady Shirley as president and CEO and Mike Eklund as CFO and COO. Jeffery McCaulley in 2017 was named global president.
Competitively speaking, DJO operates in markets that include Iceland’s Ossur, Water Street Partners’ Breg, and Thuasane USA’s Townsend, as well as units of Stryker and Zimmer Biomet.
Breg, as initially reported by the Wall Street Journal in July, was exploring a sale earlier this year via Piper Jaffray.
Final bids were due around the end of July and the company was pushing for a valuation in the $600 million range, one of the sources told Buyouts a few weeks ago. A deal has yet to be announced.
Representatives of Blackstone, DJO and Goldman declined to comment.
Action Item: Read DJO’s full Q2 financial report