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Carlyle Said to Be in US$1.2b Talks to Buy Brazil’s Fleury

6 January 2014

(Bloomberg) Carlyle Group LP (CG:US) and KKR & Co. are among private-equity funds in talks to acquire Fleury SA (FLRY3) in a deal that may total more than 2.9 billion reais ($1.2 billion).

Gavea Investimentos Ltda. and Apax Partners LLP have also looked at Sao Paulo-based Fleury, three people said, asking not to be named because the talks are private. Gavea, JPMorgan Chase & Co. (JPM:US)’s Brazil private-equity and hedge-fund unit, owns a 30 percent stake in Instituto Hermes Pardini Ltda., which competes with Fleury in providing diagnostic services to the medical profession. Gavea isn’t large enough to take control of Fleury without partnering with another investor, four people said.

Fleury missed analysts’ earnings estimates for the 12 quarters through September as it seeks to cut costs amid increasing competition from laboratories and hospitals. Slower growth in the medical-diagnostic business and an inability to transfer higher costs to customers are risks to the industry, according to a Dec. 15 report by Votorantim Corretora de Titulos e Valores Mobiliarios Ltda.