The healthcare business of Japanese electronics maker Panasonic is buying Bayer AG's diabetes care business for 1.02 billion euros or $1.15 billion, the German company annouced Wednesday.
Private equity firm KKR - Kohlberg Kravis Roberts - owns 80% of Panasonic Healthcare, according to EPVantage, the pubishing arm of market intelligence firm Evaluate Group.
The sale will include the Contour portfolio of blood glucose monitoring meters and strips, as well as other products including its lancing devices. The deal is expectec to close in the first quarter of next year per closing conditions and antitrust clearance.
Bayer's diabetes business accounted for 909 million euros or $1.02 billion in sales in 2014, which suggests that KKR and Panasonic picked up the medtech asset quite cheap.
EPVantage notes that the unit has had some operational trouble and it forecasts revenue to decrease every year by 2% till 2020.
"Since first taking steps to becoming an independent healthcare company from Panasonic Corporation through KKR's investment, it has been our key management objective to form strong partnerships with strategically pivotal companies," said Kenji Yamane, president of Panasonic Healthcare. "For more than 20 years, Bayer Diabetes Care has been our flagship partnership with whom we share complementary goals. Now, with KKR's support, we are pleased to have reached this landmark agreement with BDC."
The transaction underscores the interest of private equity firms to take over large underperforming healthcare businesses and rid them of inefficiencies through restructuring.
In January 2014, another private equity company - the Carlyle Group - bought Johnson & Johnson's Ortho-Clinical Diagnostics business for $4 billion. EQT Partners bought up Siemens’ audiology solutions or hearing aids business for $2.8 billion in November.