Private equity shop EQT leads the pack in chase for Ottobock

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Private equity shop EQT is reportedly the leading bidder for a stake in Germany’s Ottobock, the world’s largest maker of artificial limbs, as talks with rival PE player CVC continue.

EQT and CVC are vying for a 20% share in Ottobock’s bread-and-butter healthcare business ahead of an eventual public listing, “people familiar with the matter” told Reuters. Other bidders, including KKR, BC Partners and Advent, have dropped out. The talks with EQT are not exclusive and could still crumble, the sources told the news service.

Founded in 1919 as a maker of prosthetics for World War I veterans, Ottobock has said it’s worth some $3.38 billion (€3 billion), representing a 12x multiple of this year’s expected earnings before interest, taxes, depreciation & amortization of $281.3 million (€250 million). That puts the value of a 20% slice of its healthcare segment at about $676 million.

That’s an attractive valuation compared with Ottobock’s peers, because the healthcare division includes its low-margin wheelchair business. Rival Össur(PINK:OSSUY) trades at 17x expected core earnings, for example.

JP Morgan has pledged to offer a loan package of 3x EBITDA – or $843.8 million (€750 million) – to the successful buyer, banking sources told the news service.

EQT and Ottobock declined to comment; CVC was not immediately available for comment, Reuters reported.

($1 = €0.888797)

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