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July 15, 2011 6:00 AM

Dealmaker of the Week: Ryerson Symons of Simpson Thacher & Bartlett

Posted by Tom Huddleston Jr.

DEALMAKER

Ryerson Symons, 45, corporate partner in the New York office of Simpson Thacher & Bartlett.

THE DEAL

The $6.3 billion purchase of medical device company Kinetic Concepts, Inc., by a group of investment funds led by Apax Partners. (Apax is a part owner of ALM Media, LLC, parent company and publisher of The Am Law Daily.)

THE CLIENT

Simpson Thacher is advising the consortium, which consists of Apax, the Canada Pension Plan Investment Board, and the Public Sector Pension Investment Board. (The two pension plans also engaged Torys and Weil, Gotshal & Manges, respectively, as separate counsel on aspects of the deal.)

THE DETAILS

The agreement--announced on Wednesday--calls for the group of investors to pay $68.50 per KCI share in cash for a total deal value (including assumed KCI debt) of $6.3 billion. The deal, which is expected to close in the second half of 2011, includes a 40-day "go-shop" period, during which KCI will seek out alternative proposals. A group of shareholders that includes KCI founder James Leininger, which holds an 11 percent stake in the company, has pledged to vote its shares in support of the deal, according to KCI.

KCI, based in San Antonio, Texas, makes products for the health care industry, including hospital beds and wound-treatment systems.

THE BIG PICTURE

The sale price represents a 21 percent premium over KCI's average share price during a 30-day period that ended July 5, the day before speculation about a possible deal first surfaced, according to KCI.

Bloomberg notes that KCI represents an attractive takeover target because of a free cash-flow yield of almost 9 percent. The company also features a new portable wound-care device that, along with the strong cash flow, could generate high returns.

THE BACKSTORY

Apax is a longtime client of Simpson Thacher's, with Symons first working for the private equity fund while stationed in the firm's London office, back in 2004. He started working for Apax in relation to deal work for the Apax-owned German cable operator Kabel Deutschland, including a nearly $2 billion bridge to bond facility for Apax and other shareholders in Kabel.

The work "flowed into other financing engagements in Europe--most notably on the high-yield side, but also on the leveraged [finance] side," Symons says. "It expanded to some M&A work in Europe in some consortium deals and other deals, and then we were able to bring the relationship [to] our New York office."

Among Simpson Thacher's largest deals for Apax was the 2007 acquisition of Thomson Learning for $7.8 billion. Symons, who returned to the firm's New York office in 2008, has been involved in a number of deals for Apax, including last year's sale of Tommy Hilfiger to Phillips-Van Heusen Group for about $3 billion. In March, he also advised Apax on its $763 million acquisition of Trader Corp. from Yellow Media Inc.

ON CLOSING

One aspect of the deal that required a large amount of due diligence on the part of the Simpson Thacher team, he says, was the need to assess ongoing KCI litigation matters for any possible liability. KCI is currently involved in various disputes over patent-licensing royalties with Wake Forest University Health Sciences.

"That was a critical aspect of the transaction, getting a critical understanding of [the litigation]--and it's quite a complicated multiparty process--and getting a handle on the risk analysis around that," Symons says.

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