Madison Dearborn to Buy Ikaria in $1.6 Billion Health-Care Deal

Dec 24, 2013 3:26 pm ET

Dec. 24 (Bloomberg) -- Madison Dearborn Partners LLC agreed to buy hospital therapy provider Ikaria Inc. in a transaction that values the company at $1.6 billion.

Existing shareholders of Hampton, New Jersey-based Ikaria, which include New Mountain Capital LLC, Arch Venture Partners, Venrock and 5AM Ventures Management LLC, will reinvest some of the proceeds into a 45 percent stake in the company, according to a statement today from New Mountain. The firms expect the deal to close in the first quarter of 2014.

Madison Dearborn has done at least five deals this year, according to data compiled by Bloomberg. The Chicago-based private-equity firm in April agreed to buy insurance brokerage National Financial Partners Corp. for about $1.3 billion including debt. Madison Dearborn has an investment in preventative care provider Sage Products LLC, and previous health-care stakes include Team Health Holdings LLC and Valitas Health Services Inc., according to the firm’s website.

Ikaria “is very well positioned for continued strong growth by virtue of its critical therapy, longstanding relationships with hospital administration and exceptional management team,” Tim Sullivan, a managing director at Madison Dearborn, said in a statement from the buyout firm.

Ikaria’s current investors formed the company in 2007 in a $670 million merger of gaseous drug maker INO Therapeutics and Ikaria, which was then a biotechnology firm. The company today sells Inomax, a drug-and-delivery system that uses nitric oxide to treat respiratory failure in newborn infants. Madison Dearborn plans to expand Ikaria’s business internationally, including in Japan, India and China, according to the firm’s statement.

Research Spinoff

As part of the transaction, Ikaria’s current shareholders will own a research division to be spun out of Ikaria that has $80 million to fund development of heart-treatment drugs and therapies, according to the statement from New Mountain.

Ikaria was advised by Credit Suisse Group AG and Morgan Stanley and received legal counsel from Fried Frank Harris Shriver & Jacobson LLP and Wilmer Cutler Pickering Hale & Dorr LLP. Madison Dearborn was advised by Barclays Plc, Goldman Sachs Group Inc. and Kirkland & Ellis LLP.

--Editors: Josh Friedman, Sree Vidya Bhaktavatsalam