Medtronic
(NYSE: MDT)
and private equity firm Carlyle Group reportedly entered negotiations over two units the medtech giant put on the spinoff block.
Nearly a year ago, Medtronic announced its intention to pursue a separation of its Patient Monitoring and Respiratory Interventions businesses. Both are part of the company’s Medical Surgical portfolio. Months later, reports surfaced citing Siemens Healthineers and GE HealthCare among those interested in the units. Later reports suggested ICU Medical joined the running as well.
However, Reuters reports that the company may go outside of medtech to sell its businesses. The outlet says Carlyle entered into exclusive negotiations for a majority stake in the units, valued at more than $7 billion. Reuters cited “people familiar with the matter.”
The report says, if a deal goes through, the units would move to a new company majority-owned by Carlyle. Medtronic would retain a stake worth more than 35% in the new company, though. Reuters said its sources “cautioned that no deal is certain” and noted that Medtronic and Carlyle declined to comment.
Carlyle and private equity continue investing in medtech
Carlyle isn’t new to medtech investment, as private equity firms have put plenty of money toward the space.
In 2014, the group won a bidding war to acquire Johnson & Johnson’s Ortho-Clinical Diagnostics blood testing business for $4 billion. It eventually sold the business for $6 billion to Quidel last year.
The company also contributed to a $34 billion investment in Medline in 2021. Carlyle was an investor in One Medical, which sold to Amazon for nearly $4 billion last year.
Other private equity moves in medtech’s past also include Medtronic. In 2020, Blackstone pledged $337 million so Medtronic could increase R&D efforts within its Diabetes unit. Blackstone was also one of the investors alongside Carlyle in the Medline deal.
Healthcare spinoffs continue
Medtronic and plenty others in medtech have turned to spinoffs in an effort to narrow focus within their businesses. The medtech giant’s other recent spinoff news centered around its kidney care business. It launched Mozarc Medical, a venture with DaVita, earlier this year.
Baxter also spun off its kidney business, along with its acute therapies unit, into an independent, publicly traded company. It then announced plans to deal its BioPharma Solutions unit, too.
Elsewhere, both GE and 3M made major recent moves by spinning off their healthcare businesses into independent companies. GE HealthCare became a standalone company in January, while 3M’s spin is slated for late this year or early next year.