Am Law 100 Trio Leads on $1.6 Billion Medical Supply Deal

, The Am Law Daily

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Am Law firms continue to feast on end-of-year health sector deals, with the latest coming in the form of buyout firm Madison Dearborn Partners' agreement to buy a majority stake in medical supply company Ikaria in a deal worth roughly $1.6 billion.

As The Am Law Daily reported earlier this week, a spate of pharmaceutical M&A deals have created healthy workloads for a number of Am Law 100 firms as they approach the end of 2013.

Chicago-based Madison Dearborn extended the run Tuesday with the announcement that it would be stuffing its private equity stocking with Hampton, N.J.-based Ikaria, which makes medical products for critical care patients. Ikaria's leading product is Inomax, a nitric oxide-based treatment and delivery system used to treat respiratory failure in infants.

Under the terms of the transaction, Madison Dearborn will control 65 percent of Ikaria while a group of current Ikaria shareholders—including 5AM Ventures, Arch Venture Partners, New Mountain Capital and Venrock—will reinvest some of their proceeds from the deal into a 45 percent stake in the company. Those shareholders will also own a research unit to be spun off of Ikaria once the deal closes—an event that is expected to occur in the first quarter of 2014. The spin-off will have $80 million in cash to fund the development of treatments for heart disease.

Reuters reported in October that Ikaria's owners were working with financial advisers Credit Suisse and Morgan Stanley in hopes of putting together a deal that would value the company at more than $2 billion. Ikaria's investors formed the company in 2007 by financing the $670 million combination of a predecessor company also called Ikaria and INO Therapeutics, a gaseous drug company that specialized in inhaled nitric oxide products.

Madison Dearborn has turned to frequent deal counsel Kirkland & Ellis for legal advice on its acquisition of the Ikaria stake. Kirkland recently represented Madison Dearborn and Yankee Candle Company in September, when the private equity firm sold its majority stake in the scented-candle maker to Jarden Corporation for $1.8 million. Madison Dearborn's general counsel, Mark Tresnowski, is a former Kirkland partner.

For the Ikaria deal, Kirkland is fielding a team that includes Chicago-based corporate partners Sanford Perl, Mark Fennell, Matthew O'Brien and Michael Wright. Tax partner William Welke and corporate associate Eric Buske are also advising.

Ikaria, meanwhile, is being advised by attorneys at Fried, Frank, Harris, Shriver & Jacobson and Wilmer Cutler Pickering Hale and Dorr. Fried Frank previously advised New Mountain Capital in connection with the 2007 deal that formed Ikaria. The firm's team on the company's sale this week is being led by New York-based corporate partners Abigail Bomba and Aviva Diamant. Corporate partners Craig Miller and Paul Reinstein are also advising, along with antitrust partner Peter Guryan, compensation and benefits partner Donald Carleen, IP and technology partner Henry Lebowitz and tax of counsel Joel Scharfstein.

Wilmer's team is led by Boston-based Lia der Marderosian, who serves as vice chair of the firm's corporate practice. Transactional department chair Steven Singer is also advising, along with tax chair Kimberly Wethly, tax partner A. William Caporizzo, technology transaction partner Steven Barrett, corporate partner Hal Leibowitz and corporate counsel Brett Budzinski.

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