Week Ends with an LBO Bang

Two buyout firms have agreed to a multi-billion dollar deal that has committed debt financing. Do not adjust your screen, or wipe the Friday from your eyes. This is actually happening. Let’s all raise a cheery middle finger to the credit crunch.

Bristol-Myers Squibb has agreed to sell its ConvaTec unit to Avista Capital Partners and Nordic Capital for $4.1 billion. ConvaTec makes wound care and ostomy care products, which means that it no longer fits within pharma-only BMS.

“In December 2007, we announced our evolution into the leading next-generation BioPharma company and that as part of the transformation we would undergo a thorough strategic review of our non-pharmaceutical assets,” said BMS CEO James Cornelius in a press release. “Since then, we have announced the sale of Medical Imaging, the proposed carve-out initial public offering of Mead Johnson and the sale of ConvaTec.

The $4.1 billion question, of course, is who’s providing the debt and why. After all, it’s been tougher to get a loan out of Wall Street lately than a straight answer out of Roger Clemens.

Neither answer is in the press release, so I called up Avista CEO Tom Dean and Nordic partner Kristoffer Melinder. They said that J.P. Morgan is leading the lenders, and that the process was made easier by ConvaTec’s high cashflow and lack of cyclicality. In other words, PE firms have better odds of securing leverage for a medical device business than for a retail, financial or industrial business.

Citigroup and Morgan Stanley advised the seller, while Bear Stearns represented the buyers. Wonder if this is the last time we’ll be able to say that second part…

I’ll have more on this deal Monday morning.

Update: I just got a fuller list of lenders: JPMorgan, Bank of Ireland, General Electric, HVB and DKW.