GENERAL MEDICAL CORPORATION CHANGES HANDS: COMPANY WILL BE ACQUIRED

GENERAL MEDICAL CORPORATION CHANGES HANDS: COMPANY WILL BE ACQUIRED along with its parent holding company RABCO Health Services by New York investment group Kelso & Company, the medical supplies distributor announced Aug. 9. Commenting on the deal, General Medical President and CEO Steven Nielson said that the change in ownership will enable the privately- held company to develop "new products and services, to earn a larger share of the medical supplies distribution market, to expand our presence in manufacturing, and to build or acquire new distribution centers." General Medical currently operates 44 distribution centers and five manufacturing facilities nationwide, employing more than 2,000 people. Sales in 1992 were $854 mil., the company said. General Medical's current management structure will remain intact at Richmond, Virginia headquarters under Nielson, according to the release. The transaction is expected to be completed before Labor Day. "The decision to sell General Medical was made most reluctantly," said General Medical and RABCO Chairman Richard Bernstein. Bernstein is also chairman of children's book publisher Western Publishing Group, to which he has decided to devote his full attention. Terms of the deal were not disclosed. When Bernstein bought General Medical from hospital operator Whittaker Medical in 1987 in a leveraged buyout, his R.A.B. Holdings vehicle paid $79 mil. for the business ("The Gray Sheet" April 20, 1987, In Brief). R.A.B. later expanded its health holdings via the 1989 purchase of drug wholesaler Harris Wholesale, at which point the company renamed itself RABCO Health Services, Inc. As of 1991, RABCO valued its combined General Medical/Harris health interests at more than $200 mil.: a July 1991 preliminary prospectus for a RABCO initial public offering predicted net proceeds of $105 mil. from the sale of 8.2 mil. shares, which would have been about 48% of total shares outstanding had the sale gone through ("The Gray Sheet" July 22, 1991, p. 2). That deal collapsed, however, and RABCO withdrew the offering. Harris Wholesale was sold in April 1992. The company noted that in "joining the Kelso family of companies, General Medical acquires a financial partner with considerable Wall Street acumen and a well-deserved reputation for capitalizing and nurturing smaller companies to national prominence. The move is expected to bolster General Medical's ambitious plans for expansion." At 44, General Medical has the same number of distribution facilities reported in the 1991 prospectus. The number of employees has doubled, however, from 1,000 to 2,000. Kelso's past experience in the health care field includes a role in the $230 mil. leveraged buy-out of American Sterilizer Company: Kelso joined with AMSCCO management, First Boston and Bristol-Myers to take the company private in 1985.