Palex Medical begins a new stage. The Knuth family, founder and owner of the company, has sold the majority of the shareholding of the healthcare technology group to the private equity fund Corpfin Capital, for an undisclosed amount. The objective of the transaction is for Palex to strengthen its financial capacity in order to undertake a new phase of growth through the acquisition of companies in the sector and the diversification of its business lines. After growing by 8%, Palex Medical closed 2015 with sales of €106.74 million, of which 70% come from supplies to Spanish public hospitals.

Source: https://www.expansion.com

The challenge is to double revenue within five years, although these forecasts could be widely exceeded depending on the inorganic transactions that are completed. Palex already has several acquisitions on the table and will now benefit from the experience of Corpfin Capital in integrations and build-up processes. This fund controls the bakery chain El Fornet in Catalonia and is a shareholder in the airline Volotea.

In addition to maintaining a significant shareholding of 40%, the Knuth family will remain fully involved in the evolution of Palex and will continue to chair its board of directors, where the fund will hold four seats and the family two. The siblings Juan—group chairman—Verena and Pedro Knuth Schultheis, members of the third generation who have led the company together with the rest of the management committee, have already been ratified by Corpfin Capital, which relies on their experience to ensure the success of this new stage.

The transaction is pending approval from the National Commission for Markets and Competition (CNMC) and the consent of the main international companies that Palex represents in Spain and Portugal, a country that accounts for 5% of its sales.

Headquartered in Sant Cugat del Vallés and with a workforce of 300 employees, the healthcare technology and supplies group operates through ten divisions and markets products from more than 400 international companies. Palex Medical, which does not manufacture, is particularly strong in technology and instruments for cardiac surgery, such as valves and pacemakers. Orthopaedic surgery is another of its business pillars, along with the areas of diagnostics and nephrology. Among its flagship products is a system that allows dialysis to be performed at the patient’s home and Oncotype, a predictive breast cancer test. The also Catalan company Werfen is one of its main competitors.

Sector under pressure

The economic crisis, healthcare cuts, pressure on prices and declining margins, the progressive consolidation of the private healthcare sector and the high level of late payments by Spanish public administrations have had a strong impact on Palex, which required support from banks to overcome the situation during the recession.

In 2012, the company had accumulated payment delays of up to 600 days, until it managed to collect most of the debt in one go thanks to the supplier payment plan promoted by the Ministry of Finance, so the situation is now more normalised.

Palex, which recorded its revenue peak in 2010 with €113 million, returned to growth in 2015, reaching €106.7 million. With the entry of Corpfin Capital, the Knuth family wants the company to have the necessary financial resources to take advantage of the strong growth potential and opportunities offered by a still fragmented sector.

Potatoes and sutures, the origin

Palex was founded by Hans Knuth—grandfather of the current managers—a German who arrived in Valencia in the 1930s to study Spanish and ended up staying. After working in a bank, he created Patata Lechuga Exportación, a company dedicated to exporting early potatoes and lettuces. Alongside his agricultural business, in 1955 he decided to set up a factory in Rubí (Vallés Occidental) to produce catgut sutures from sheep intestines. He did so in partnership with B. Braun, which took a 49% stake in the company.

In addition to selling the products of his factory, Knuth began distributing other brands, and the former Patata Lechuga Exportación adopted the name Palex and focused on medical supplies under the leadership of the second generation: the brothers Wemer—father of Juan, Verena and Pedro—and Hayo Knuth.

The partnership with B. Braun lasted until 1991, when the German group took full ownership of the Rubí facility. In 2000, the brothers decided to separate the businesses: Wemer kept Palex and Hayo took over the family’s real estate division. In 2007, the third generation chose to step back from management and appointed an external CEO.

Want to know more?

Corpfin Capital y Palex Medical – Capital-riesgo.es

El fondo Corpfin Capital compra Palex Medical – Expansion.com