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Published on : Jun 12, 2018

Ample funds parked under private equity firms in the U.S. are preferably being invested in public companies, a trend garnering attention from players in various industries since the financial crisis. Against this backdrop, KKR & Co., a globally prominent private investment firm announced on June 11 that it will acquire U.S.-based physician services providers Envision Healthcare Corp for $5.57 billion. The deal is latest in the series of acquisitions the investment firms has made in recent years and is considered as the largest private equity buyouts. KKR has offered $46 per share for the acquisition deal, which including debt is valued at nearly $9.9 billion. Post the announcement, Envision’s shares were valued at $44.7 in the premarket trading.

Ample Funds Parked with Private Firms looking for Buyouts

Private equity firms are awash with funds-$1 trillion in cash-which have great propensity to be leveraged for buyouts. The New York-based private equity firm has already included Envision’s AMR in its kitty after acquiring it last year. Furthermore, it acquired WebMD the same year. The timing for the announcement for the acquisition of Envision is significant as it has disclosed plans to buy U.S. technology company BMC Software. The estimated valuation of the deal is $8.5 billion, including debt.

Acquisition Deal to augur well for Healthcare Industry facing Headwinds

Envision has been struggling with dwindling profits as its Q3 results showed last year. This was chiefly attributed to the disappointing number of patient admissions. The deal will tentatively close by the Q4 of this year. Of note, the U.S. healthcare industry has experienced few headwinds in recent years and experts believe that the purchase price was fixed keeping this in mind. Of note, the industry has hit rough weather with the dynamically changing ways health insurers in the U.S. have been reimbursing healthcare providers.  

The firms advising KKR on the deal are Guggenheim Partners, Evercore Inc., and JPMorgan Chase & Co.