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Biomet IPO: Medical Devices Company Could Raise $1 Billion

Private equity is looking for payback after 2007 buyout


According to people close to the company, a Biomet IPO could be on the way, which would add another public player in the medical devices space.

Biomet-ipoThe process still is in the early stages, but Reuters is reporting that people close to the company have said Biomet has already selected Bank of America (BAC), Goldman Sachs (GS) and JPMorgan (JPM) as the lead underwriters, and the deal could raise nearly $1 billion.

Biomet, which got its start back in 1977, develops medical devices primarily for musculoskeletal purposes. These include things like orthopedic joint replacement devices, bone cements and accessories, autologous therapies and dental reconstructive implants, electrical bone growth stimulators, bone substitute materials and spinal products.

Biomet has shown steady growth over the years, and most recently, during fiscal 2013, revenues increased by 8% to $3 billion. However, that rate might get a further boost in the years ahead because of the aging populations in the U.S. and Europe, as well as the company’s expansion efforts in Asia. Such factors could provide some excitement for a Biomet IPO.

Biomet agreed to a $11.3 billion buyout deal back in 2007 that included big-name private equity sponsors including Blackstone (BX), KKR (KKR), TPG and Goldman Sachs (GS). As expected, that led to swift actions to streamline operations and cut costs, and Biomet now sports some juicy margins. For instance, FY 2013 adjusted EBITDA came to $1.08 billion of that $3 billion in revs.

However, to pull off the transaction, Biomet had to take on a hefty amount of debt. In fact, much of it — about $5.9 billion — is still on the balance sheet.

Wall Street probably won’t not mind. After all, other debt-laden companies have had successful IPOs like Brixmor (BRX), Hilton (HLT) and SeaWorld (SEAS). But it is a consideration.

Also, similar companies in Biomet’s industry have done well lately. For example, during the past year, shares of Stryker (SYK) have gained nearly 30%, and the same goes for Medtronic (MDT).

The Biomet IPO deal likely will hit the markets much later in the year.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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