Apax Partners-advised funds are buying 50.1% of BD's Respiratory Solutions business. The deal is the latest in a long string of major medtech M&A deals.
Becton, Dickinson and Co. is selling 50.1% of its Respiratory Solutions business to funds managed by private equity firm Apax Parters, forming a joint venture that will operate a new independent company.
The deal, announced Tuesday, valued the business at $500 million, which means BD is receiving about $250 million.
BD's roughly-$900-million-a-year respiratory devices business includes the company's Ventilation, Respiratory Diagnostics, Vital Signs, and AirLife business lines. About 5000 employees at facilities in Yorba Linda, CA; Palm Springs, CA; Plymouth, MN; Mexicali, Mexico; Cotia, Brazil; Hoechberg, Germany; and Shenzen, China will be part of the new company.
BD will remain a significant but non-controlling minority owner of the new company after the deal closes.
"We have been proactively targeting the industry for respiratory devices and have been impressed with the continued progress the company has made over the past few years," Steven Dyson, partner at Apax Partners, said in a news release.
Tom Polen, president of BD's Medical Segment, said: "We have determined that the Respiratory Solutions business and its associates will be best served under a different ownership model that will provide more strategic focus and investment to grow the business into a pure-play, global respiratory care leader."
The deal between BD and Apax is but the latest chapter in a frenzy of medtech M&A activity that has been taking place. The next major M&A move could involve Toshiba's medical device business. A single company, Canon, is now negotiating to buy the business in what media outlets estimate could be a sale worth about $6 billion.
Health providers and private insurers have been merging in response to the U.S. government's efforts, through Medicare, to make patient management more efficient and effective. That environment has created a great deal of pressure for medical device makers to consolidate in order to offer better economies of scale, as well as create a whole cafeteria of products and services to offer up around each device.
Medical device companies are an attractive investment, says Mark Bonifacio, principal and owner of Bonifacio Consulting Services (Natick, MA), which part of the advisory team for the BD-Apax transaction.
"The space still remains attractive for strategics and private equity buyers as margins are typically higher than some other industries (think consumer electronics). ... As our healthcare system in North America and globally continues to expand, larger OEM's will be well positioned to offer complete solutions to providers, literally cradle to grave type services from products, to distribution and inventory management, through reprocessing and disposable," Bonifacio said.
Learn more about cutting-edge medical devices at BIOMEDevice Boston, April 13-14, 2016.
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