Cortec Group signs letter of intent to buy Dr Leonard’s Healthcare

Private equity firm Cortec Group has signed a letter of intent to acquire Edison, NJ-based health and home care products cataloger Dr. Leonard’s Healthcare, which also mails the Carol Wright Gifts catalog, for about $200 million. A source familiar with the deal says the sale should close by mid-May.

The letter of intent ends weeks of speculation over which private equity firm would get the Dr. Leonard’s business. New York-based American Securities bought Dr. Leonard’s in December 1999 for $100 million.

The New York-based Cortec’s offer beat out bids by fellow private equity firms Freeman Spogli, U.S. Equity Partners, and Oak Hill Capital Partners. No catalog companies were in the running.

Dr. Leonard’s president Steve Brotman would not comment on the deal. Calls to Cortec Group went unreturned.

According to online publication “The Daily Deal,” Cortec is paying about eight times earnings before income, taxes, depreciation, and amortization (EBITDA).

That Dr. Leonard’s fetched such a high multiple shows that it “is a premier property, with good growth and large operating margins,” says Mike Petsky, CEO of New York-based investment bank Petsky Prunier. Many consumer catalog businesses, he points out, have been commanding four-to-six times EBITDA.

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