Throw the dog a bone

14 September 2009 By Lauren Silva

The investment firm got creamed on its Chrysler and GMAC bets. But its buyout of drugs company Talecris is shaping up to be a hit. The pending IPO could give it a return 24 times its original investment. Private equity can still be a jackpot.

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Talecris Biotherapeutics, a pharmaceutical company owned by Cerberus and Ampersand Ventures, has filed for an initial public offering. The company is offering 29m new shares and insiders are trying to sell 16m existing shares in the IPO at $18 to $20 a share. It would be an $855m offering at the midpoint of the range. The company will have 120m shares outstanding after the deal.

Cerberus and its equity partners will own 60.5% of the shares after the deal. The equity will be valued at $2.3bn at the midpoint of the range. The company currently has $1.1bn of debt. It will use the proceeds of the offering to pay down over $500m of debt.

Cerberus and its private equity partner Ampersand Ventures bought Talecris for $590m in 2005. It had previously been a division of Bayer Group. In December 2006, the private owners completed a $1.4bn leveraged recapitalization. The owners took a $760m dividend and repaid over $200m of existing debt.

Australian company CSL agreed to buy Talecris in August 2008 for $3.1bn. But in May this year the US Federal Trade Commission challenged the merger. On June 8, 2009, the parties agreed to terminate the deal and CSL paid Talecris a termination fee of $75m.

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