USA — Private equity giant Carlyle Group Inc. has entered into exclusive negotiations to acquire a majority stake in two medical device businesses owned by Medtronic Plc.
These developments come with a valuation exceeding US$7 billion, according to sources with knowledge of the matter.
Medtronic’s strategic aim is to streamline its portfolio by focusing on high-growth assets, including heart and diabetes devices.
As a result, it has decided to divest two units that collectively generated around US$2.2 billion in revenue during the 2022 fiscal year, as confirmed by the company itself.
These businesses, once divested, are slated to form the core of a new company, with Carlyle Group becoming the majority owner.
Medtronic will still retain a significant stake in the newly formed entity, exceeding 35%, according to the same sources.
Should an agreement be reached in the following weeks, it would mark the conclusion of Medtronic’s year-long review of its patient monitoring and respiratory interventions businesses, which it had also considered spinning off into a standalone public company.
Medtronic, a New York-listed company with a market value of US$105 billion, specializes in medical devices that address over 70 health conditions through its divisions spanning cardiovascular, diabetes, medical-surgical, and neuroscience sectors.
In August, the Dublin-based company revised its annual profit forecast upward as demand for its medical devices surged due to the return of non-urgent surgery volumes to pre-COVID-19 levels.
In parallel, Medtronic’s competitor, Baxter International Inc., has also been streamlining its assets to focus on growth.
Earlier this year, Baxter announced its intent to spin off its renal care and acute therapies units, followed by the sale of its biopharma solutions business to a private equity consortium in a US$4.25 billion deal, including debt.
Carlyle Group, with US$385 billion in assets under management, is a prominent investor in the healthcare sector.
Past deals include its involvement with primary care clinic operator One Medical, which it took public and later sold to Amazon.com Inc. for US$3.9 billion.
Another notable transaction is Ortho Clinical Diagnostics, a medical screening business acquired from Johnson & Johnson in 2014 for US$4 billion, which was subsequently sold to COVID-19 test maker Quidel Corp. in a US$6 billion cash-and-stock deal completed last year.
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