Medline — The largest buyout since the financial crisis.
When the 2007–2008 financial crisis was announced, the world came to a halt. Businesses ended, work life altered, many people went through varying shifts in their life, and the economy dropped. It’s been a couple of years since then, and due to the on-going Covid-19 pandemic, medical shares have been booming. Due to the rise in trends, many experts described this time period as the “golden era” for private equity firms.
Their guess came to be true when Medline Industries Inc. was been declared as the largest buyout since the time of the financial crisis. Unsurprisingly, a group of private equity firms backed by Blackstone Group, Carlyle and Hellman & Friedman shelled as much as $30 billion to buy medical supplies from the company (as reported by the Wall Street Journal). Goldman Sachs acted as the responsible party to search for potential buyers for the company.
The current management will still be heading the company, however, there will be changes in logistics as the brand now plans to expand to global trade and strengthen its existing supply chain. In the field of healthcare, Medline Industries is the largest LBO in history. However, many experts predict that this could be a “club deal” and could suffer a similar fate to TXU Corp. (known as the largest buyout in history that surpassed every other company in all kinds of industries). Unfortunately, TXU Corp. was declared to be bankrupt in 2013.
However, there are some people who are not entirely convinced by the motives of this buyout. Ludovic Phalippou, a professor of financial economics at University of Oxford Saïd Business, said, “The Medline deal smells to me a bit like placing money. I think it’s a fairly safe bet. It sounds like a deal that’s going to earn a normal rate of return like 8% or 10%. It will not go very high or very low. They’re just placing money almost passively.”
