Emergency Medical close to deal with CD&R: source

NEW YORK Mon Feb 14, 2011 6:12am GMT

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NEW YORK (Reuters) - Private equity firm Clayton Dubilier & Rice is close to a deal to buy healthcare and physician services company Emergency Medical Services EMS.N, a source familiar with the matter said on Sunday.

If a deal is reached, it could be one of the biggest leveraged buyouts this year. Emergency Medical had a market capitalization of just over $3 billion at the close of trading on Friday.

A deal could be announced as early as Monday, the source, who declined to be named because the process is not public, said.

New York-based Clayton Dubilier & Rice has made another medical investment - in 2010, together with Goldman Sachs (GS.N), it bought medical products provider HGI Holdings. Other recent acquisitions it has made include buying a 42.5 percent stake in chemicals and commodity distributor Univar.

Private equity firms are sitting on substantial capital to invest and scouring the market for companies to buy, but in some recent cases have found themselves outbid by strategics.

Buyout firms including TPG Capital TPG.UL, Blackstone Group (BX.N), Carlyle Group CYL.UL and Apollo Management APOLO.UL recently lost out in an auction of medical diagnostics company Beckman Coulter BEC.N when the company sold itself to Danaher Corp (DHR.N) for $5.8 billion.

A private equity consortium's pursuit of Sara Lee SLE.N also failed as the company decided on a spin-off.

Emergency Medical Services said in December that it was reviewing its strategic alternatives. The company provides healthcare transportation services through its American Medical Response Inc unit, and provides physician services to healthcare facilities through its EmCare Holdings business.

It hired advisers to weigh options including a sale after getting takeover approaches by private equity firms, a source familiar with the situation said at the time.

Bids for Emergency Medical Services were due about a week ago and potential buyers had been asked to re-submit offers, a source previously told Reuters.

Rival private equity firm Bain Capital had also been pursuing Emergency Medical Services, a source familiar with the matter previously told Reuters.

Bloomberg earlier reported that CD&R is close to a deal for EMS and said could pay about $70 a share.

Shares of EMS have risen 31 percent since the day before the company said it was weighing strategic alternatives. Shares closed on Friday down 3 cents at $70.66.

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