Ares Life Sciences, Merrill Lynch to Buy Euromedic

Ernesto Bertarelli, the Swiss-Italian biotech billionaire, returned to the front line of business on Friday as his new €1bn ($1.5bn) healthcare fund joined with Merrill Lynch to buy Euromedic, the Hungary-based medical diagnostics and dialysis group, for €800m.

It is the first deal by Ares Life Sciences since its creation earlier this year using some of the €6.9bn Mr Bertarelli and his sister earned from selling Serono, their family’s Swiss biotechnology business, to Germany’s Merck two years ago.

Warburg Pincus, which bought Euromedic with GE Healthcare three years ago, earned more than three times its initial equity investment in the company and generated an annual return of more than 60 per cent on the deal. Merrill Lynch Global Private Equity, which manages more than $5bn of investments, will jointly run the company with Ares Life Sciences fund.

Debt and mezzanine financing for the acquisition was provided by ING, Unicredit and Bank of Ireland.

It is one of the biggest in a string of recent private equity acquisitions in central and eastern Europe this year, reflecting strong economic growth in the region.

Mr Bertarelli, one of the richest men in Switzerland, has spent much of his time focusing on sailing since he gave up his seat as chief executive of Serono. His Alinghi team has won the America’s Cup yacht race twice in succession for Switzerland.

The Harvard-educated 42-year-old, who married a former Miss United Kingdom, is also a member of UBS’s board of directors.

As well as his own money, Ares Life Sciences has also raised capital from several wealthy family offices. It has shied away from publicity and has no website.

His consortium saw off heavy competition for Euromedic, which attracted bids from several private equity groups, including EQT Partners, Montagu Private Equity and BC Partners.

Under Warburg Pincus’s ownership, Euromedic has expanded from 32 healthcare centres in four countries, to 159 centres in 14 countries. Its revenues are budgeted to grow from €140m last year to €284m this year.

“It is now truly a pan-European company, rather than just a central and east European company,” said Nick Lowcock, a partner at Warburg Pincus.

About half its revenues come from medical diagnostics, such as CAT and MRI scans. A third come from kidney dialysis. Earnings before interest, tax, depreciation and amortisation are forecast to grow from €29m last year to €64m this year.

The company has recently won its first contracts in the UK from the NHS and is building on two greenfield sites in south London and one in the Midlands.

SOURCE: The Financial Times