KKR to take medical-equipment maker Integer Holdings private in $5.7 billion deal

By Padmanabhan Ananthan

Aug 3 (Reuters) - KKR ‌will take ​medical-device manufacturer ​Integer Holdings private in an all-cash deal valued at about $5.7 billion, expanding its healthcare portfolio with the acquisition of a key ‌supplier to the medtech industry.

Shares of Plano, Texas-based Integer Holdings rose ⁠2.6% in early trading.

The private equity firm is gaining a critical supplier to medical-device companies, ‌with Integer producing components and ‌finished products used in cardiovascular and neuromodulation therapies, among other applications.

The takeover comes amid sustained private-equity interest in healthcare. Some notable buyouts over the past ​year include American Industrial Partners' $1.27 billion acquisition of Avanos Medical and Blackstone and TPG's deal for women's-health-focused diagnostics firm Hologic for $18.3 billion.

KeyBanc Capital Markets ⁠analyst Brett Fishbin told Reuters the latest acquisition was positive for medtech as it showed private equity firms ​were "realizing the value of public companies with strong track records" despite "transitory headwinds" that have weighed on stock prices, citing Integer ​as an example.

Fishbin said Integer could serve ‌as a platform for KKR, which could "acquire additional smaller assets" and layer them into the company's existing operations.

For KKR, which had $796 ⁠billion in assets under management at the end of the second quarter, the buyout will deepen its healthcare exposure and rank among its largest deals in the sector ⁠since its $9.9 billion take-private of Envision Healthcare in 2018.

Under the deal terms announced on Monday, ​KKR is paying $127 per share in cash, representing a 4.78% premium to Integer's closing price on Friday. The transaction includes the assumption of Integer's outstanding debt.

Integer has faced activist investor ‌pressure in the past. In March, the company reached an agreement with Irenic Capital Management, one of its largest ‌shareholders, to appoint two directors to its board. Irenic owns a stake of more ⁠than 3% in Integer, according to ‌LSEG data.

The deal with ​KKR is expected to close by the end of the year, Integer Holdings said.

(Reporting by Padmanabhan Ananthan in Bengaluru; Editing by ‌Pooja Desai)

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