Medline's money machine - Reuters

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Devices on a wall inside of a doctor's office in New York, March 22, 2010. REUTERS/Lucas Jackson

Private equity firms dangle big payouts to those who invest. Sometimes those who ride their coattails do even better. Take the Mills clan that founded Medline Industries. Blackstone (BX.N), Carlyle (CG.O) and Hellman & Friedman agreed to buy a majority stake in the medical kit maker on Saturday read more . The $34 billion deal’s outline suggests the family could get a big windfall, without giving up their empire.

The various clan members own equity in Medline worth $30 billion. In the proposed transaction they’ll refinance a bit less than half of that with debt, and sell three-quarters of what’s left to the buyout firms. While the precise terms aren’t public, these rough numbers would appear to leave the dynasty on course to extract more than $25 billion in cash.

Medline’s founders were well placed to get a sweet deal because other buyout firms were also circling. They’ll retain significant influence through their stake and through the company’s top managers being family members. In short, it looks like they’ve managed to have their cake and eat it – something more often true of buyout firms themselves. (By John Foley)

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Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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Medline's money machine - Reuters
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