Clearspring seeks to sell Medical Pharmacies, could fetch C$1 billion: sources

By John Tilak and Carl O'Donnell

TORONTO/NEW YORK (Reuters) - Private equity firm Clearspring Capital Partners plans to sell Medical Pharmacies Group, a Canadian provider of drug services to nursing homes, in a deal that could fetch as much as C$1 billion, according to sources familiar with the situation.

Toronto-based Clearspring has hired investment banks BMO Capital Markets and Harris Williams to facilitate a sale, the sources said, speaking on condition of anonymity as the matter is private.

Clearspring is looking to sell the unit more than five years after first investing in it, hoping interest will be strong following a deal last year for a similar company in the United States: CVS Health Corp`s (NYSE:CVS - News) roughly $10 billion purchase of Omnicare.

The sale auction process is likely to get under way next month, the sources said.

"The business continues to perform extremely well and we are continually evaluating the right time to exit, as we do with all of our portfolio companies," Clearspring Managing Director Joe Shlesinger said in an email. He declined to comment on the timing of Clearspring's exit plans for Medical Pharmacies Group.

BMO and Harris Williams did not immediately respond to requests for comment.

Clearspring has used acquisitions to expand Medical Pharmacies Group's business. Medical Pharmacies bought Ottawa-based specialty pharmacy services provider Desjardins Healthcare Group in 2013.

Interest in Medical Pharmacies Group is expected to come from financial and strategic buyers on both sides of the U.S.-Canada border, the sources said.

Potential buyers would include private equity firms looking to expand into the fast growing long-term care industry, said one investment banker who declined to be named as he was not authorized to speak to the press.

Other suitors could include peers of Medical Pharmacies Group, such as PharMerica Corp (NYSE:PMC - News), the source said.

Grocer Loblaw Cos Ltd (Toronto:L.TO - News), owner of Shoppers Drug Mart, on Monday agreed to buy healthcare technology company QHR Corp (TSXV:QHR.V - News) for about C$170 million.

Clearspring's other investments include Spectrum Health Care, a Toronto-based provider of home health care services, and Town Shoes, one of Canada's biggest footwear retailers. The firm changed its name earlier this year from Callisto Capital.

(Reporting by John Tilak in Toronto and Carl O'Donnell in New York; Editing by Jim Finkle and Steve Orlofsky)