Patterson Companies acquired by Patient Square Capital: fairness opinion by Guggenheim Securities
Announced December 11, 2024 · Going-private · All cash ·
DEFM14A filed February 27, 2025
Distribution and Equipment Services Distribution: Equipment
Enterprise value
$4.1B
EV / LTM EBITDA
12.0x
EBITDA $343M · 5% margin
EV / LTM revenue
0.61x
revenue $6.7B
DCF discount rate
8.6%–10.2%
Deal terms
ConsiderationAll cash
Price per share$31.35
Premium—
Premium basis—
StructureGoing-private
Termination fee$111M (4.0% of equity)
Reverse termination fee$222M
Go-shopNone
Outside date—
FilingDEFM14A · EDGAR index
Opinion of Guggenheim Securities to the target board
Delivered December 10, 2024
Discounted cash flow assumptions
Discount rate—
BasisWACC
Terminal value—
Perpetuity growth—
Exit multiple—
Projection periodFY2025E-FY2029E
Projections usedPatterson standalone projections as of December 2024 (Patterson-Provided Financial Projections, fiscal years ending April 26, 2025 through April 28, 2029)
Implied value per share—
Discounted cash flow analyses performed based on the Patterson-Provided Financial Projections; numerical outputs not disclosed in the sliced sections.
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Selected Publicly Traded Companies Analysis | Compared Patterson's financial performance, certain trading multiples and trading activity of its common stock with corresponding data for publicly traded companies Guggenheim Securities deemed relevant; specific companies and multiples not disclosed in the sliced sections. | — |
| Selected Precedent Merger and Acquisition Transactions Analysis | Reviewed the valuation and financial metrics of certain precedent mergers and acquisitions deemed relevant in evaluating the Merger; specific transactions and multiples not disclosed in the sliced sections. | — |
| Historical Trading Analysis | Reviewed the historical prices, certain trading multiples and the trading activity of Patterson common stock. | — |
| Premiums Paid Analysis | Reviewed premiums paid in connection with certain public precedent merger and acquisition transactions deemed relevant in evaluating the Merger. | — |
| Illustrative Leveraged Buyout Analysis | Performed illustrative leveraged buyout analyses based on the Patterson-Provided Financial Projections, with certain adjustments relating to the contemplated financing of customer receivables as discussed with Patterson management. | — |
3,000+ healthcare deal-level valuation multiples
The Valuation database includes financial details for more than 3,000 healthcare M&A transactions, private and public, with deal-level multiples, categorized by segment, type, and year.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $6.9B | $7.1B | $7.4B | $7.8B | 4.2% |
| Revenue growth | 2.7% | 3.4% | 4.6% | 4.7% | |
| EBITDA | $370M | $405M | $446M | $482M | 9.2% |
| EBITDA growth | 7.9% | 9.5% | 10.1% | 8.1% | |
| EBITDA margin | 5% | 6% | 6% | 6% | |
| Implied EV / EBITDA | 11.1x | 10.1x | 9.2x | 8.5x |
Year-1 growth is against LTM at announcement ($6.7B revenue, $343M EBITDA); later years are year over year.
Management prepared two sets of standalone, unaudited projections for fiscal years 2025E-2029E: the June 2024 Long-Range Plan update (revenue $6,832M in FY2025E rising to $8,181M in FY2029E; EBITDA $367M to $529M; adjusted EPS $2.43 to $3.87) and the Updated Long-Range Plan approved December 6, 2024 (revenue $6,674M to $7,757M; EBITDA $343M to $482M; adjusted EPS $2.28 to $3.49), which reflected sector-specific challenges and first-half results. At the Board's direction, Guggenheim Securities relied on the December 2024 projections for its fairness opinion and related analyses. The December case assumed FY2025E-FY2029E CAGRs of approximately 3.6% in dental and 3.9% in animal health (versus 4.7% and 4.6% in the June case).
Process notes
Going-private buyout of Patterson by Patient Square Capital; Guggenheim Securities was the sole financial advisor and delivered an oral opinion on December 10, 2024, confirmed in writing the same date, to the Patterson Board. The Board held executive sessions with only independent disinterested directors (CEO Mr. Zurbay recused from go-shop direction). The deal included a go-shop period running through 11:59 p.m. Central on January 19, 2025, during which Guggenheim contacted 27 potential parties (1 strategic, 26 financial sponsors); a lower 'go-shop' termination fee of approximately $55.4 million (1% of equity value) applied before the No-Shop Period Start Date versus approximately $110.8 million (2%) after. Reverse termination fee of approximately $221.5 million plus up to $10 million of enforcement costs, guaranteed by Patient Square Equity up to a maximum of approximately $231.5 million. Background discloses Dentsply Sirona's non-renewal of distribution agreements (July 31, 2024) and a price path from $31.00-$34.00 to $33.50-$35.00 and then down to $30.00 per share before the final agreed price. Quantitative outputs of Guggenheim's analyses (multiples, discount rates, implied per-share ranges) were not included in the sliced sections.
Other Distribution and Equipment Services fairness opinions
- Agiliti / Thomas H. Lee Partners 2024 · 9.4x EV/EBITDA
- Quipt Home Medical / Kingswood Capital Management / Forager Capital Management 2025 · 4.7x EV/EBITDA
- Covetrus / Clayton, Dubilier & Rice 2022 · 14.0x EV/EBITDA
- Apria / Owens & Minor 2022 · 12.0x EV/EBITDA
- Universal Hospital Services / Federal Street Acquisition 2018 · 11.9x EV/EBITDA
- PSS World Medical / McKesson 2012 · 10.6x EV/EBITDA
All Distribution and Equipment Services opinions → · Guggenheim Securities opinions