Carlyle in exclusive talks for $7 bln-plus Medtronic units deal-sources
29/09/2023 18:08
(Adds background on the companies paragraphs 6-11)
By David Carnevali
NEW YORK, Sept 29 (Reuters) - Private equity firm
Carlyle Group Inc CG.O has entered into exclusive negotiations
to acquire a majority stake in two medical device businesses of
Medtronic Plc MDT.N at a valuation of more than $7 billion,
according to people familiar with the matter.
Were an agreement to be reached in the coming weeks, it
would mark the culmination of Medtronic's 12-month review of its
patient monitoring and respiratory interventions businesses,
that it also considered spinning off into a standalone public
company.
Medtronic is seeking to streamline its portfolio and focus
on its higher-growth assets, such as its heart and diabetes
devices, by divesting the two units which generated
approximately $2.2 billion in revenue in the 2022 fiscal year
according to the company.
The businesses that Medtronic would shed would be moved to a
new company majority-owned by Carlyle, the sources said.
Medtronic would retain a stake in the new company of more than
35%, the sources added.
The sources cautioned that no deal is certain and requested
anonymity because the matter is confidential. Medtronic and
Carlyle declined to comment.
New York-listed Medtronic, which has a market value of $105
billion, makes medical devices that treat more than 70 health
conditions across its cardiovascular, diabetes, medical surgical
and neuroscience divisions.
The Dublin, Ireland-based company raised its annual profit
forecast last month, as the return of non-urgent surgery volumes
to pre-COVID-19 pandemic levels boosted demand for its medical
devices.
Earlier this year, Medtronic competitor Baxter International
Inc BAX.N also embarked on a pruning of its assets to focus on
growth. It said in January it would spin off its renal care and
acute therapies units and in May it agreed to sell its biopharma
solutions business to a private equity consortium comprising
Warburg Pincus and Advent International for $4.25 billion,
including debt.
Carlyle, one of the world's biggest private equity firms
with $385 billion in assets under management, is a prolific
investor in the healthcare sector.
Its previous deals include primary care clinic operator One
Medical, which it took public and then sold to Amazon.com Inc
AMZN.O for $3.9 billion last year, and Ortho Clinical
Diagnostics, a medical screening business it acquired from
Johnson & Johnson JNJ.N in 2014 for $4 billion before selling
it to COVID-19 test maker Quidel Corp QDEL.O in a $6 billion
cash-and-stock deal that was completed last year.
(Reporting by David Carnevali in New York; Editing by Elaine
Hardcastle)
((David.Carnevali@thomsonreuters.com;))