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Is There an End in Sight for J&J Divestitures?

The New Brunswick, NJ-based company has received a $2.7 billion offer for its sterilization unit from Fortive and is planning to sell its LifeScan diabetes unit to Platinum Equity for $2.1 billion.

Johnson & Johnson has received an offer for its sterilization unit. The New Brunswick, NJ-based company said Fortive is seeking to acquire the business for $2.7 billion.

The sterilization business is part of the Ethicon division and earned about $775 million in sales in 2017. J&J has 120 days to accept the offer and if the deal goes through it could close no later than early 2019.

Fortive said it would finance the acquisition through debt or equity and with available cash. The company said it expects the deal to add to adjusted earnings in the first full year after the transaction.

"As we balance the interests of all our stakeholders to deliver the greatest value to customers, healthcare providers and shareholders, we must continuously assess strategic fit and explore alternatives for our businesses,” Shlomi Nachman, Company Group Chairman, Interventional Solutions and Specialty Surgery with Johnson & Johnson, said in a release. “ASP has a long history of pioneering infection prevention technology, and we are confident that Fortive would be well-positioned to continue to drive the business toward achieving its full potential.”

This is the latest in what is becoming a long line of divestitures for J&J. It's also part of a series of significant changes within the firm's medtech offerings. Back in 2016, J&J’s medtech division was in a state of turmoil. The company cut about 6% of its workforce in the device space to reduce costs.

In recent years, the device side has performed a bit better– but divestitures have continued. Early last year, J&J turned heads when it announced it was selling its Codman Neurosurgery Business to Integra Lifesciences for $1.05 billion.

But even before the deal closed, Codman made an acquisition of its own – picking up Neuravi Limited, a private stroke care company, for an undisclosed sum.

J&J is also planning to sell its diabetes unit, which for the past few years has had sluggish performance. In March, the company received a $2.1 billion offer from Platinum Equity to acquire its diabetes unit, LifeScan.

Prior to the offer, J&J had announced plans to shut down Animas Corp., which once provided insulin pumps to 90,000 patients. J&J said those insulin pump users would have the option to transfer over to Medtronic pumps.


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