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Indianapolis-based private investment company LDI Ltd. LLC has acquired a small biotech manufacturer in a deal it says could be the launching point for many more acquisitions.
LDI closed on the purchase of UltiMed Inc., a Minneapolis-based maker of syringes and other drug-injection devices, on Aug. 29.
Terms of the newly announced deal were not disclosed.
UltiMed has 71 employees, is profitable and is on pace to bring in $25 million in revenue in 2014, LDI said. Fifty-nine of its employees work at a product-development and manufacturing facility in De Smet, South Dakota.
The company, founded in 1988, also owns part of business in Gong-Ju, South Korea, that makes syringes.
LDI plans to grow UltiMed, which does business under the UltiCare name, by expanding its relationships with retail pharmacies, broadening its product-development capabilities, and by merging it with more acquired companies.
The goal is to turn UltiMed into a “platform” company—a term used by private equity groups to describe an acquired company in a new niche that will become the base for follow-on acquisitions.
LDI already has two established platform companies: Tucker Rocky, a leader in the wholesale distribution of aftermarket parts, apparel and accessories for the powersports industry; and OIA Global Logistics, a leading international third-party logistics provider.
In June, LDI merged Tucker Rocky with California-based Motorsports Aftermarket Group, forming Velocity Holdings, a company with 2,250 employees and an estimated value of $382 million. OIA has made several acquisitions since LDI acquired majority interest in 2010.
Turning a biotech manufacturer into a third platform company gives LDI “an opportunity for diversification,” LDI Chairman Andre Lacy said.
UltiMed is probably too small at this point to be called a platform company, Lacy said, “but this could become a platform company. FinishMaster was much smaller when we got started with it.”
LDI acquired FinishMaster for $12 million in 1996 and sold it for $172 million in 2011. Through several add-on acquisitions, LDI built FinishMaster into the largest national distributor of aftermarket automotive paint in the collision repair industry. The company had 1,450 employees in 160 locations when it was sold.
UltiMed has several qualities that attracted LDI, including its Midwestern manufacturing base, its focus on innovation and its leadership in certain product niches, LDI Vice President Ryan Polk said.
Most of UltiMed's products are used to treat diabetes, one of the world's fastest-growing chronic diseases. The company is known for its unique UltiGuard system, which combines needle storage and safe disposal in one package.
It's also the largest manufacturer of syringes used to treat small animals with diabetes, a growing area of home pet care.
One other potential big-growth area could be its products for long-term care and senior-care markets, Polk said.
Polk said the UltiMed was ripe for acquisition because it had aging shareholders who were seeking liquidity for their investment and a management team with an aggressive plan for growth.
The management team will remain in place.
“Our manufacturing business is a great fit with LDI,” UltiMed President Jim Erikson said in a written statement. “We welcome LDI’s experience in distribution and their culture as a family office. We are excited to partner together to grow our business.”
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