Carlyle's $3.8 Billion Go-Private Deal

In the biggest private equity deal of the year, Carlyle Group will acquire the vitamin and nutritional supplement company NBTY for $3.8 billion, or $55 a share in cash, offering shareholders a huge premium.

Some background on the deal itself: Carlyle approached NBTY with an offer in early May, according to people familiar with the deal.

NBTY , which has a market value of about $2.3 billion, moved to a limited auction, and quickly Carlyle jumped the process with a $55 a share offer. NBTY accepted and has a 35-day go-shop provision—where somebody can come into if they want to.

The question is: will any of the sponsors that were beaten out here by Carlyle have the punch to decide to come back over the next 35 days?

At the end of the day, when you look at the financing for this deal, it simply comes down to everybody’s view of what they can get in terms of internal rate of return.

Carlyle will have to write an equity check that will top $1 billion with financing at five-times EBITDA.

Bank of America is leading the $2.8 billion in financing—Barclays Capital and Credit Suisse are also involved.

The bottom line: given the high premium, this seems to be a good deal at this point for NBTY shareholders.

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