Jordan Co. To Sell Harrington for $850 Million

Another day, another big PE deal in the healthcare sector. This time it’s The Jordan Co. agreeing to sell Harrington Holdings, operator of Edgepark Medical Supplies, to Clayton, Dublier & Rice and GS Capital Partners for $850 million.

Jordan bought a majority stake in the healthcare distributor more than two years ago, when it was still a family-owned business. The families continued to run the business, while Edgewater Funds, a Chicago-based PE shop, also owned a position.

Bloomberg News, which first reported the sale, says the deal will be comprised of 48% equity and the rest debt. The deal is expected to close in fourth quarter.

“We were incredibly fortunate to be partnered with Ron Harrington and Steve McLaughlin and with the management team they assembled, which was led by Kurt Packard,” said Adam Max, a Jordan managing principal “Those three individuals were just fantastic partners and great operators.”

Harrington went up for sale in April and the process was very competitive, the source says. Harrington is selling to PE firms, instead of a strategic, because its distribution model is very diversified.

Harrington has a variety of competitors but no single competitor across its entire model, the person says.

“It’s a niche business but a large business so it doesn’t necessarily fit into the distribution models that are out there,” the source says.

Harrington is also different from other distributors because it provides its products direct to consumers. It is also not as dependent on diabetes products. Government reimbursement of diabetes products has come under much scrutiny, the person says.

Harrington’s sale represents the continued interest in healthcare distributors. Water Street Healthcare Partners acquired Tri-anim Health Services and Bound Tree Medical, both healthcare product distributors, in 2008 and merged them to form Sarnova. Patterson Co., a healthcare distributor that serves the dental, veterinary and rehab supply market, has made many acquisitions in the space. In June, Patterson bought the rehabilitation businesses of DCC Healthcare, which is owned by DCC Plc. The units Patterson acquired, Days Healthcare, Physiomed and Ausmedic, provide assisted living products, rehab equipment and supplies to hospitals, physical and occupational therapists and long-term care facilities.

“Healthcare distribution is a really good business for PE to buy in,” one banker says. “In medical distribution, all forms of it, there is still a fair amount of consolidation.”

Jefferies & Co. advised HGI, while Goldman and Morgan Stanely provided financial advice to CD&R and GS Capital Partners.