Today, we announced that partner company Portico Systems, Inc. has signed a definitive agreement to be acquired by McKesson. This transaction represents Safeguard Scientifics’ fourth substantial exit transaction in the past six months with a top tier, multinational corporation.
McKesson has agreed to pay $90 million, in cash, for Portico, of which $5 million will be contingent upon the achievement of performance milestones. Safeguard expects to receive aggregate cash proceeds of approximately $38 million related to its equity interest in Portico, of which $2 million will be contingent upon performance milestones and $4 million will be held in escrow, representing a 4x cash-on-cash return. In addition, Safeguard will be repaid all amounts owed under its $5 million mezzanine debt facility with Portico. The consummation of the transaction is subject to standard conditions to closing, including applicable antitrust clearances and is expected to close in the third quarter of 2011.
Portico became a Safeguard partner company back in 2006. From those humble beginnings, and with the capital and operational support and commitment from Safeguard, Portico is now at the forefront of revolutionizing the way payers manage relationships with providers—ultimately driving down costs and increasing quality of healthcare.
As we mentioned above, McKesson’s acquisition of Portico represents Safeguard’s fourth substantial exit transaction in the past six months. As a quick recap, the previous announcements included:
- December 2010—Clarient was acquired by GE Healthcare for $587 million, through which Safeguard realized a total of more than $200 million in cash from the sale of its equity interests in Clarient between 2009 and 2010—representing the largest cash return in Safeguard’s history.
- December 2010—Avid Radiopharmaceuticals was acquired by Eli Lilly and Company (NYSE: LLY) for an upfront payment of $300 million and up to $500 million in additional contingent payments based on Avid’s achievement of certain challenging regulatory and revenue milestones.
- In May 2011—Advanced BioHealing announced that it was to be acquired by Shire plc (LSE: SHP, NASDAQ: SHPGY) for $750 million.
We are proud to have helped nurture Portico to the point where they garnered interest from a top-tier, global organization. We want to congratulate Ned Moore, Chairman, CEO and co-Founder of Portico, and the rest of the Portico team on a successful milestone, and wish them the best of luck in their future endeavors.