(Reuters) – Apax Partners LLP is in advanced talks to acquire medical cost containment services company One Call Care Management Inc from Odyssey Investment Partners LLC for more than $2 billion, three people familiar with the matter said on Thursday.
Under the proposed deal, Apax would pay between $2.2 billion and $2.3 billion for One Call, two of the people said. Apax will separately acquire Align Networks Inc, a workers’ compensation claims company backed by General Atlantic LLC, in order to merge it with One Call, the third person added.
Apax prevailed over other private equity suitors in the auction for One Call, including Carlyle Group LP (CG.O: Quote, Profile, Research, Stock Buzz), Hellman & Friedman LLC and a consortium of Silver Lake and Berkshire Partners LLC, the people said. They cautioned that negotiations had not been finalized and could still fall apart.
The people asked not to be named because the negotiations are private. One Call, Apax, Carlyle, Hellman & Friedman and Silver Lake declined to comment. Representatives of Odyssey, Align Networks, General Atlantic and Berkshire Partners did not immediately respond to requests for comment.
One Call provides workers’ healthcare compensation payers, such as insurance companies, with discounted access to diagnostic radiology and neurodiagnostics providers.
Merging One Call with Jacksonville, Florida-based peer Align Networks would allow Apax to capture synergies and provide a rationale for paying more for One Call than the other buyout firms were willing to offer.
Parsippany, New Jersey-based One Call makes its money on the spread between the prices charged to these payers and the discounted prices contracted with providers and vendors in its network.
Odyssey, a New York-based buyout firm with about $3 billion in assets under management, acquired One Call Medical Inc in 2009 and merged it with industry peer MSC Care Management Inc in 2012.
One Call’s $529 million acquisition of MSC was made possible partly through a $210 million senior unsecured term loan held by GSO Capital Partners, the credit investment arm of Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz), which also invested in One Call Care Management’s equity, according to credit research notes issued at the time.
Besides the MSC merger, One Call made several other acquisitions to expand its networks under Odyssey’s ownership. In July, the company said it would acquire smaller peer TechHealth Inc.
A deal for One Call Care would be Odyssey’s second agreement in less than a month to sell a portfolio company. Earlier this week, it reached a deal to sell TNT Crane & Rigging Inc, one of the largest U.S. crane service providers, to energy-focused private equity firm First Reserve Corp, in a deal pegged by sources at between $700 million and $800 million.