By Bruce Japsen
Chicago Tribune
Copyright 2008 Chicago Tribune Company
CHICAGO — Water Street Healthcare Partners, a Chicago-based private-equity firm, said it bought a stake in two suppliers of emergency and other specialty medical products that are merging into one firm.
Tri-anim Health Services Inc. of Sylmar, Calif., and Bound Tree Medical Products of Dublin, Ohio, merged to tap growth in the fragmented health-care industry and to create a national distribution and sales platform for the combined company’s products. The merged company is expected to generate more than $400 million in annual revenue and provide about 100,000 products to thousands of hospitals, surgery centers and providers of emergency care. The deal closed Wednesday.
Water Street, which introduced the parties to the idea of consolidation, is committing $75 million in equity financing to “expand the combined entity’s market-leadership position,” the firm said.
Water Street focuses on health-care investments and continues to raise money for such deals. In August it bought a majority stake in Alpine Biomed Corp., a specialty diagnostic device company, for $50 million.
“This transformational combination creates the nation’s first multichannel specialty distributor providing hospitals and emergency medical service providers with unparalleled expertise and customer service,” said Chris Sweeney, Water Street’s principal on the merger.
Tri-anim’s specialty is the distribution of respiratory aids such as humidifiers, breathing tubes and sleep-disorder products. Bound Tree distributes needles, syringes, splints, burn-care items and bandages.
Tri-anim and Bound Tree will keep their names and retain ownership stakes in the combined company, which Water Street values at $250 million. The companies would not disclose the specific stakes Tri-anim, Bound Tree and Water Street will own in the larger merged company, which will be managed under a holding company known as Sarnova.
A new executive management team will be recruited. Bob Byers, Tri-anim’s chief executive, will become chairman of the board of the combined firm; Bound Tree CEO Matthew Walter will become a director.
The investment is the seventh from a $370 million fund since Water Street was founded in 2005. , The fund has largely been spent. Water Street is now raising a second fund, which could be as large as $600 million.
Water Street executives said they could not comment further on plans for the second fund or when fundraising would be completed.