Bain, Avista said to study bid for kinetic concepts to top Apax

Bain Capital LLC and Avista Capital Partners LLC are seeking to raise financing for a takeover offer for Kinetic Concepts Inc. that would top Apax Partners LLP’s $5 billion bid, said two people familiar with the plan.

Bain and Avista, owner of wound-care maker ConvaTec Inc., may make an offer as early as next week, said one of the people, who declined to be identified as negotiations are private. Goldman Sachs Group Inc., Deutsche Bank AG, Citigroup Inc. and Jefferies Group Inc. are in talks to arrange the financing, said the people.

The buyout firms may drop the plan if they can’t obtain financing at terms that are economically viable as borrowing costs for U.S. leveraged buyouts climb to the highest level since December, said one person. By partnering with Avista, Bain aims to attract Kinetic’s board with the benefits of a combination with ConvaTec, which could lead to cost savings, said two of the people.

A higher offer from the two New York-based firms may come without committed financing, though would include a letter from lenders expressing confidence in obtaining the funds, said one of these people. Kinetic’s board would then have to determine whether it prefers Apax’s offer, whose financing is committed.

Spokesmen at Bain, Kinetic and Goldman Sachs didn’t immediately return calls seeking comment. James David, a spokesman for Avista, said he couldn’t immediately comment. Spokesmen at Jefferies, Citigroup, Apax and Deutsche Bank declined to comment.

Apax, a London-based private-equity firm, and its partners announced the takeover of San Antonio-based Kinetic July 13. The so-called go-shop period, in which Kinetic can seek other offers for 40 days, expires next week.

Kinetic Performance

Kinetic, led by Chief Executive Officer Catherine Burzik, got about 70 percent of its $2 billion in revenue from the wound-treatment business last year. The company, founded more than 30 years ago, also makes hospital beds and tissue- regeneration products used in surgeries.

Buyout firms rarely attempt to poach targets from their rivals. If Apax’s deal for Kinetic goes through, the transaction would be the the largest buyout since New York-based Lehman Brother Holdings Inc. filed for bankruptcy protection in September 2008.