November 23rd, 2009

Bloomberg News reports:

Nov. 23 (Bloomberg) — King Pharmaceuticals Inc., LifePoint Hospitals Inc. and Endo Pharmaceuticals Holdings Inc. may be buyout targets as private-equity firms seek companies battered by the economy and poised to gain from the U.S. health overhaul.

The three companies, with market caps of about $1 billion to $3 billion each, are steady cash producers with little debt and low share prices compared with their earnings potential, a profile sought by acquirers, according to Pali Capital Inc. in New York and Zurich-based Credit Suisse Group AG.

Buyout managers are sitting on $400 billion in unspent capital and finding easier financing as debt markets thaw, according to researcher Pitchbook Data Inc. They see opportunity in health care, where companies are trimming costs and spinning off units in response to the economy, even as the industry stands to gain from U.S. legislation that may expand care to more than 30 million Americans, said Karen Bechtel of the Carlyle Group, the world’s second-largest equity firm.

“The combination of health-care reform and the recession has forced companies to be more careful about running their businesses,” said Bechtel, who heads the Washington firm’s health-care unit, in a telephone interview. “That’s driving activity, and it will accelerate.”

King, based in Bristol, Tennessee, rose 34 cents, or 2.9 percent, to $12.14 at 9:46 a.m. in New York Stock Exchange composite trading. LifePoint, of Brentwood, Tennessee, climbed 82 cents, or 2.8 percent, to $30.21 in Nasdaq Stock Market composite trading and Endo, based in Chadds Ford, Pennsylvania, gained 50 cents, or 2.3 percent, to $22.70.

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