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KCI strikes $275 million deal for bed business
August 15, 2012

By Patrick Danner, San Antonio Express-News

San Antonio-based Kinetic Concepts Inc. has struck a deal to sell its specialty hospital beds business, which launched the company more than 35 years ago.

The wound-care company announced today that Getinge Group, a global health care provider based in Sweden, has signed a deal to acquire KCI's Therapeutic Support Systems (TSS) unit for $275 million.

The asset sale is expected to close next quarter.

The TSS unit sells and rents hospital beds, mattress-replacement systems and patient-mobility units.

Getinge agreed to offer employment to TSS employees. Getinge reported TSS has about 1,300 employees globally, including about 200 in San Antonio.

In January, KCI announced it would pursue "strategic alternatives" for TSS. That followed November's leveraged buyout of KCI by London-based private equity firm Apax Partners and affiliates of two Canadian pension investment management firms.

The buyout left KCI saddled with a lot of debt, about $4.67 billion as of March 31.

KCI spokesman Mike Barger said proceeds from the sale will be used to expand its core business of pressure-wound therapy. That includes new-product development and geographic expansion.

In a statement, KCI President and CEO Joseph "Joe" Woody said: "Strategically, the sale of the TSS business is important for KCI as it will enable us to focus even further on core growth, execution and realization of our vision - providing transformational healing solutions."

The TSS business generated $247 million in revenue last year, Getinge reported. In this year's first quarter, TSS had $58.5 million in revenue, a 13.5 percent decline from $67.6 million in revenue in the same period last year, KCI previously reported.

Ratings agency Moody's, in a report, viewed the announced sale as "positive because it frees up (KCI) management and capital resources in order to focus on the company's bigger, more profitable ... businesses."

In a conference call, a transcript of which was posted on Bloomberg, Getinge CEO Johan Malmquist said the "therapeutic surfaces" market is about $1.5 billion and expanding by about 5 percent to 7 percent.

"This is a business that is very complementary to our existing support services business within our extended care division," Malmquist said on the call.

The TSS business will be integrated into Getinge Extended Care under the ArjoHuntleigh brand, Getinge said in a statement.


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