J&J now mulling three bids for Ortho Clinical Dx division

Johnson & Johnson's ($JNJ) bid to unload its Ortho Clinical Diagnostics arm has moved to the next phase, with executives whittling its list of potential buyers down to three interested parties. Expect the winning bidder to emerge before the end of 2013.

Bloomberg reported that a joint bid by Danaher ($DHR) and Blackstone Group ($BX) made it through the interim round, as well as offers by Carlyle Group and a combined submission from Capital Partners and Leonard Green & Partners. In all, at least five bidders initially expressed interest, including Bain Capital Partners, and most came from the private equity arena, sources told the news agency.

According to Bloomberg, sources also indicated that the deal should be finalized before the end of the year. Naturally, none of the potential bidders or J&J commented for the Bloomberg story (ongoing negotiations and all). A final price tag could reportedly reach close to $4 billion (more than enough to cover Johnson & Johnson's recent $2.5 billion-plus offer to settle 8,000 patient lawsuits over the company's now-recalled ASR all-metal hips).

J&J first started getting the word out in January that it wanted to sell its Ortho Clinical Diagnostics business, and news leaked earlier this fall that the company had begun to approach potential buyers. The division includes blood screening equipment and laboratory blood tests to screen for heart attack damage, hepatitis C and HIV, among other conditions and infections. While Ortho Clinical Diagnostics booked $2.16 billion in sales for the company in 2012, it hasn't grown quickly enough to meet executives' expectations. Molecular diagnostics are much hotter these days, and the sector is growing much more rapidly.

Still, whichever bidder ends up buying Ortho Clinical Diagnostics will gain a division whose tests generate steady demand and use. And a new owner could unlock the potential for further growth.

Of the remaining reported bidders, Danaher and Blackstone's rumored joint offer may be the most interesting. Both sides were on opposite sides of a previous acquisition bidding war. Danaher won that battle in 2011 when it snatched up Beckman Coulter ($BEC), a deal that gave a substantial lift to its diagnostics and life sciences business.

- read the full Bloomberg story