The acquisition vehicle will be a company that will be equally controlled by Investor and MSPI, with Mölnlycke’s management as minority owner.

Investor is committing about 65 percent of the capital and MSPI approximately 35 percent (see press release for further details). The majority of the acquisition will be financed by external debt.

Mölnlycke will be an associated company in Investor’s Operating Investments business area and represents an attractive investment in the healthcare sector, where Investor currently has about 17 percent of its total portfolio assets and substantial experience and knowledge from many prior and current investments.

Right time for a long-term owner

Over the past two years Apax Partners, seller of Mölnlycke, has built the Swedish company by skillfully merging and integrating the businesses of two British companies – Regent Medical and Medlock – acquired by Apax in 2005. With solid growth in an expanding sector, Mölnlycke was ready for an exit. In this respect, the timing was right for Investor to enter the scene and acquire Mölnlycke. The company is virtually on the launchpad, and Investor – with its long-term ownership approach and focus on value creation – has the right industrial perspective and experience to grow Mölnlycke’s business over a longer time horizon.

Mölnlycke is well positioned today with strong product brands that constitute a springboard for future business. The company’s mission is to be a global company that provides outstanding solutions for safe, efficient surgical procedures and gentle, effective wound healing.

Fast-growing business

Mölnlycke is one of the world’s largest and fastest-growing manufacturers of single-use surgical and wound care products, with annual revenues of EUR 760 million and around 5,500 employees worldwide. Mölnlycke is a sound company, generating income of approximately EUR 230 m. (30% margin), according to the latest financial figures.

Mölnlycke’s operations are divided into two profitable high-growth segments – Wound Care Products and Surgical Products.

Wound Care Products

Mölnlycke’s Wound Care Products areas are based on the concept of gentle and effective care to deliver novel, patient-centered, trauma- and pain-free solutions supporting wound healing and skin integrity. In Wound Care, Mölnlycke’s products range from advanced products, such as moist and antimicrobial dressings, to surgical dressings and antiseptics.

Surgical Products

Surgical products are designed for peace of mind in the operating room, an environment that requires safe, comfortable and efficient products for stress relief. Here, Mölnlycke products provide world-class infection control supported by innovative service solutions. Surgical products include drapes and staff clothing used in operations, prepackaged single-use products – known as custom procedure trays – and more everyday items like surgical gloves and antimicrobial substances.

Leading market positions

In the European wound-care market, Mölnlycke is the No.1 manufacturer and provider of these products. Globally, the company is also No. 2 foam-based supplier, producing and selling specialized wound-care products made with Mölnlycke’s patented “Safetec” foam technology, used in bandages, etc.

In the surgical products segment, Mölnlycke is in a market-leading position within single-use surgical consumables. For example, the company is the global leader in powder-free surgical gloves, the European leader in headwear and surgical drapes and gowns, and No. 2 in Europe in custom procedure trays and masks.

The investment rationale

The Mölnlycke acquisition is attractive to Investor in a number of ways.

First, there are favorable underlying market trends which should benefit Mölnlycke’s stable-growth businesses. These include an aging population, increased healthcare spending, growth in welfare-related chronic diseases and the emergence of new surgical procedures.

Second, there are other trends impacting healthcare. The European Union has a directive, for example, supporting conversion from multi-use surgical drapes and gowns to single-use products – the type Mölnlycke specializes in – which should lead to increased consumption.

Hospitals are also focusing more and more on total costs by eliminating the infection risks associated with operations. This should lead to increased consumption of single-use products for infection control during surgical procedures.

All these factors should provide a strong platform for Mölnlycke’s continuing growth. In Mölnlycke’s case, Investor plans to leverage this platform so Mölnlycke can further grow organically and by means of acquisitions.

The value creation plan defined for Mölnlycke will focus on accelerating growth in existing markets, expansion into new geographic markets, increasing R&D, and new product development.

Mölnlycke can also expand by acquiring add-on products and growing the acute care sector (defined as the treatment of sudden or unexpected injuries or illnesses) and the home care sector.

In line with Investor's strategy

The Mölnlycke acquisition is also in line with Investor’s strategy to increase its portion of unlisted assets and to grow its new Operating Investments business area.

Mölnlycke is an exciting deal and the second major transaction executed by Investor’s one-year-old Business Development unit, which also engineered the Gambro buyout with EQT in mid-2006.

The acquisition is awaiting regulatory approval.

Information updated 2007-10-04 12:15:39