Collins Stewart Encourages Kinetic Concepts (KCI) to Shop Around, Values Shares at $73-$76

Collins Stewart is reiterating its Buy rating on shares of Kinetic Concepts (NYSE: KCI) following an announcement that its board has agreed to be acquired for $68.50/share by a consortium of private equity firms being led by Apax Partners Holdings.

The company has a 40 day grace period to look for other bids from a third party, while the transaction is expected to close in the second half of 2011. The firm does not believe that KCI was soliciting itself for a takeover, but was approached by Apax Partners.

Collins Stewart recommends that the board shops around as they value the company at $73-$76/share in a takeover.

An analyst at the firm comments, "The consortium has secured debt financing from several large banks, which indicates that funding for these LBOs is available. The recent challenges in the debt markets has added some nuances, but they are not significant, in our opinion."

For more ratings news on Kinetic Concepts click here and for the rating history of Kinetic Concepts click here.

Shares of Kinetic Concepts closed at $64.49 yesterday.

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