| Industry: |
Healthcare |
| Investment date: |
January 2004 |
| Acquired by: |
Onex Partners I |
| Investment: |
$102 million /
$24 million from Onex |
| Status: |
Realized |
| Final realization: |
November 2005 |
| Value realized: |
$248 million /
$63 million by Onex |
| Gross IRR: |
78% |
| Head office: |
Avon, Connecticut |
The amounts above include Onex’ share of the carried interest and are net of any payments under the Management Investment Plan.
At the time of its acquisition by Onex Partners I, Magellan Health Services, Inc. was the leading provider of managed behavioural healthcare services in the United States. We identified the company as an attractive acquisition candidate early in its Chapter 11 proceedings, and helped the company emerge from bankruptcy with a significant reduction in debt and an injection of new equity.
In June 2005, we sold 56% of our interest in Magellan, with the balance of the investment realized in November 2005. Our investment of $102 million generated $248 million in proceeds, yielding a 78% IRR and returning 2.4x invested capital.
More detail is available in our
case study.
Magellan Health Services – Case Study
Sponsoring the industry leader through Chapter 11 and a turnaround strategy
In 2002, after extensive research, we believed that the managed behavioural healthcare industry was an attractive opportunity for value creation. We identified Magellan Health Services, then in Chapter 11 protection, as an excellent investment candidate. While the company was in need of a financial and operational restructuring, we were confident that the company’s new management team and strong market position provided real strengths upon which to build. Onex worked with Magellan Health Services’ management team to lead a restructuring of the business.
In early 2004, Magellan Health Services emerged from bankruptcy with a $500 million reduction in debt and $150 million of new equity. Onex Partners I invested $102 million for a 24 percent equity interest in the company. Over the next year, Magellan Health Services developed new products to reinvigorate its value proposition and concurrently achieved significant cost savings. We sold our interests in Magellan Health Services through two public offerings in May and November 2005 for total proceeds of $248 million, an IRR of 78%.
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