Stay informed with free updates
Simply sign up to the Private equity myFT Digest — delivered directly to your inbox.
US buyout groups Blackstone and TPG have struck a $18.3bn takeover of healthcare technology company Hologic, the latest in a wave of large corporate buyouts that underscores how abundant financing is stoking private equity deals.
Tuesday’s takeover of Hologic, which sells diagnostic services to test for diseases such as breast cancer, follows a string of big takeovers struck by private equity groups as the industry’s largest players work to deploy more than $2tn in unused cash they must invest in the coming years and take advantage of falling financing costs.
Last month, Silver Lake and Affinity Partners struck a $55bn takeover of video gaming company Electronic Arts, marking the private equity industry’s largest takeover. Software private equity specialist Thoma Bravo this year has struck two takeovers exceeding $10bn: a software unit from Boeing in April and last month’s deal to take HR software group Dayforce private
The EA deal capped off a 42 per cent year over year increase in private equity takeover activity in the third quarter led by large deals exceeding $1bn, according to S&P Global Market Intelligence.
In the EA, Hologic and Dayforce transactions, private equity buyers turned to banks to arrange large debt packages as borrowing costs for deals dropped.
JPMorgan led the financing of a more than $25bn debt package for the EA takeover. A group of five lenders led by Citi and Bank of America have arranged a more than $12bn financing package for Blackstone and TPG’s Hologic takeover, according to people briefed on the matter.
Thoma Bravo’s over $5bn financing package for Dayforce came at a cost of just 3 percentage points over the secured overnight financing rate. That put the deal’s overall financing costs at just over 7 per cent, widely seen as low by historical standards.
Private equity’s use of banks instead of private credit funds for takeover financing marks a turn from 2022 and 2023. The Federal Reserve’s interest rate increases at that time left many banks stuck holding takeover loans for companies such as X and Citrix and nursing large paper losses. That prompted lenders to retreat from making new financing commitments.
Only earlier this year were the banks finally able to fully sell their loans. Many have now returned to the private equity market with gusto, offering financing packages with terms and overall costs that are looser than the financing options offered by private credit funds.
The Hologic takeover marks the largest take-private in the healthcare sector since 2006. The company specialises in diagnostic technology to detect breast cancer, as well as producing sexual health and Covid-19 testing kits. Similar to other life sciences groups, Hologic has struggled to maintain investor interest after benefiting from a surging share price during the pandemic.
The Financial Times first reported in May that TPG and Blackstone made a take-private offer for Hologic. As part of the deal announced on Tuesday, Hologic’s shareholders will receive $76 a share in cash and a further $3 a share based on the deal closing and the company reaching certain performance targets.
That represents a 46 per cent premium to Hologic’s trading price before the Financial Times report in May for an enterprise value of up to $18.3bn.
The wave of private equity deals has occurred against a backdrop of broader corporate takeover activity. Warner Bros Discovery said on Tuesday it has received interest for parts or all of its business.
A particularly busy summer of megadeals has emboldened dealmakers to believe the much-heralded M&A boom under US President Donald Trump could be coming to fruition.
