Jun 8, 2021 - Economy & Business

Medline's mega-buyout could open the door for more super-sized deals

Illustration of a giant stack of money in a briefcase
Illustration: Sarah Grillo/Axios

Historically low yields in the debt capital markets will no doubt assist a trio of private equity firms in funding their newly announced mega-buyout of Medline Industries.

Why it matters: Medline's deal values the medical supplies company at around $34 billion, making it one of the largest of LBOs of all time. It could crack open the door for more super-sized deals.

By the numbers: At $34 billion, it would be the second-largest post-financial crisis LBO, according to PitchBook data.

  • But the largest post-crisis deal, Dell Technologies' $67 billion purchase of EMC in 2016, was different because it was also a strategic tie-up.
  • The only pre-crisis buyout larger than Medline's size is the acquisition of Energy Future Holdings for $45 billion in 2007.

State of play: Medline's new owner group — Blackstone, Carlyle and Hellman & Friedman — is expected to kick in $17 billion of equity, Bloomberg reports. That would leave up to $17 billion to be financed with debt.

  • In comparison, the largest LBO debt financing post-crisis so far was $14.6 billion for Kraft Heinz in 2013, according to S&P Global Market Intelligence's LCD.

The bottom line: On the debt market's ability to absorb that much new issuance, a high-yield manager tells Axios: "If market conditions stay status quo — cakewalk."

Go deeper with Axios Pro Rata author Dan Primack's take on the deal.

Go deeper