Kohlberg & Co. has agreed to sell Critical Homecare Solutions Holdings Inc. to MBF Healthcare Acquisition Corp. (AMEX: MBH), for approximately $420 million. CHS is a Conshohocken, Pa.-based provider of home infusion therapy and specialty infusion services. MBF Healthcare is a special purpose acquisition vehicle. The transaction includes approximately $180 million in cash, $180 million in debt provided by Jefferies Finance and a $35 million issuance of MBF common stock to Kohlberg, other shareholders and CHS management. Get more info.
MBF Healthcare Acquisition Corp. (Amex: MBH), a publicly traded special purpose acquisition company, announced today that it has signed a definitive stock purchase agreement with Critical Homecare Solutions Holdings, Inc. (along with its subsidiaries, “CHS”). Privately-owned CHS is a leading provider of comprehensive home infusion therapy and specialty infusion services, based in
The home infusion industry is estimated to be approximately a $5 billion market, growing at approximately seven percent per year due to constructive cost setting for payers, a favorable reimbursement environment, and positive demographic trends. The market is largely fragmented with the top four home care infusion companies, which includes CHS, representing 25 percent of the market, with the remaining 75 percent represented by smaller local and regional companies. This combination of macro drivers and market fragmentation presents a favorable dynamic for growth through acquisitions as well as organically. CHS is also well positioned to take advantage of the 400 new specialty infused drugs currently in the pipeline from pharmaceutical manufacturers.
For the three month period ended December 31, 2007, CHS generated an annual run rate of adjusted revenues and adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately $218 million and $43 million, respectively. CHS maintains a healthy pipeline of acquisition targets and expects to continue its acquisition strategy of acquiring four to six companies per year.
Pursuant to the terms of the agreement, MBH will acquire all of the outstanding capital stock of CHS, a Kohlberg & Co., LLC portfolio company, for $420 million, subject to customary adjustments as set forth in the stock purchase agreement. Upon completion of the acquisition, MBH will change its name to Critical Homecare Solutions, Inc., and expects its common stock to continue trading publicly on the American Stock Exchange.
MBH intends to fund the purchase price and the acquisition costs and provide additional capital to CHS for growth and expansion through a combination of approximately $180 million of cash in its trust account, approximately $180 million of debt provided by Jefferies Finance LLC, a $35 million equity issuance of MBH common stock to Kohlberg & Co., LLC, other stockholders of CHS and certain senior members of CHS management, and a commitment from MBF Healthcare Partners, L.P. to acquire up to an additional $50 million in shares of MBH common stock. The shares of MBH common stock to be issued to Kohlberg & Co., LLC, other stockholders of CHS and certain senior members of CHS management and the shares that are subject to the commitment from MBF Healthcare Partners, L.P. will be priced at the closing per share price of MBH common stock on February 6, 2008, which was $7.65.
The closing of the acquisition and the issuance of equity to MBF Healthcare Partners, L.P. pursuant to its commitment are subject to MBH stockholder approval and other customary closing conditions. In addition, the closing of the acquisition is conditioned on holders of less than 30% of the shares of MBH common stock issued in its initial public offering voting against the acquisition and electing to convert their MBH common stock into cash, as permitted by the company's Amended and Restated Certificate of Incorporation. Assuming the transactions receive requisite stockholder approval and all other conditions are met, MBH anticipates completing the acquisition of CHS in the second or third quarter of 2008.
The combined company will be led by CHS's President and Chief Executive Officer Robert Cucuel, a seasoned homecare executive. Mr. Cucuel was previously President and CEO of Air Products Healthcare and a founder, President and CEO of American Homecare Supply. Mr. Cucuel and his management team have been consolidating homecare companies for the last 12 years and have integrated over 60 acquisitions during that time. Since its founding in 2006, CHS has acquired and integrated eight acquisitions, making it a leading consolidator of independents in the sector.
Mr. Cucuel said, “We are very pleased with the attention received by MBF Healthcare Acquisition Corp. as they recognized the value of our business, our acquisition track record and the opportunities for consolidation in the home infusion industry. The transaction with MBF meets our goal of becoming a publicly traded company. We are well positioned to continue our growth strategy that in less than two years has enabled us to become one of the largest providers of home infusion therapy and specialty infusion services.”
Mike B. Fernandez, Chairman and Chief Executive Officer of MBH, commented, “We promised our investors that we would acquire a healthcare services company that is a market leader in its industry, with positive EBITDA, a strong management team and a platform well positioned to take advantage of market opportunities, and that is exactly what we have done. Critical Homecare Solutions Holdings, Inc. has become a leader in consolidating a very fragmented home infusion industry and the company is very well positioned to benefit from the extensive pipeline of infused specialty drugs. Robert and his team have proven throughout their careers, and since the inception of CHS, that they can grow and integrate companies. The growth experienced by CHS in less than two years is very impressive and we will make sure that we continue to support its growth. We look forward to working with Robert and his team in achieving their goal of making CHS the largest home infusion company in the
About MBF Healthcare Acquisition Corp.
MBH is a blank check company formed for the purpose of acquiring, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination of one or more operating business in the healthcare industry.
About Critical Homecare Solutions, Inc.
CHS is a leading provider of comprehensive home infusion therapy and specialty infusion services to patients suffering from acute or chronic conditions. CHS delivers over 400,000 infusion pharmaceuticals, biopharmaceuticals, nutrients and related services each year to patients in the home through 33 infusion locations in 14 states, primarily in the eastern
About Kohlberg & Company, LLC
Kohlberg & Company, LLC is a leading