Talecris IPO Gives Cerberus Much-Needed Happy Ending

The $950 million initial public offering priced by Talecris Biotherapeutics last week was good for a lot of people -- perhaps none more than private equity firm Cerberus Partners.

In the weeks ahead of the IPO, some folks had criticized Talecris' massive debt and generous pay-outs to insiders, while others had praised the company's healthy blood products operation. Although a few bears remain, last week's massive IPO -- which priced in the middle of its target range and proceeded to trade up -- silenced many of the naysayers.

The fact that Talecris' IPO didn't crash and burn is good news for biotechs. As a Bayer spin-out with products and profits, the company isn't much of a model for biotech IPO hopefuls. But it's nice that the second drug company to price in this emerging, fragile IPO window helped to open it wider rather than slamming it shut a la Dov Pharmaceutical in 2002.

Along those same lines, the Talecris IPO was good for pre-public companies in other industries as well. And it was certainly good for Talecris itself, which will now be able to eliminate about half of its debt.

But nobody got more out of the offering than Talecris' majority investor Cerberus. According to MarketWatch:

Cerberus-Plasma Holdings LLC owned roughly 74% of Talecris before the IPO and retains about 38% of the company. That means the offering generated about $350 million in cash for the Cerberus vehicle. The remaining Cerberus stake was valued at $864 million.

Cerberus initially invested $82.5 million in the company in March 2005. Cerberus collected more than $10 million in advisory fees over several years and Talecris declared over $800 million in dividends to its shareholders in 2005 and 2006. Add in the impact of the IPO and Cerberus has generated a net gain of about $1.8 billion from its Talecris investment. That's almost 23 times its original investment.

Cerberus photo by Flickr user Arenamontanus, CC.