KKR-backed Panasonic Healthcare to buy Bayer diabetes device biz for almost $1.2B

Contour blood glucose meter--Courtesy of Bayer

The long-rumored sale of Bayer's diabetes device business to Panasonic Healthcare looks like it's finally coming to fruition after speculation stretching back at least to early this year. Bayer has said it will sell its Diabetes Care business to Panasonic Healthcare for €1.022 billion ($1.16 billion) in a deal expected to close during the first quarter of next year.

Private equity firm KKR owns 80% of Panasonic Healthcare, with Panasonic holding the remaining 20%; they are financing the Bayer transaction. Earlier media speculation had put the price tag for the Bayer diabetes business much higher--in excess of $2 billion. The sale will include Bayer's blood glucose monitors and supplies as well as lancing devices for diabetics.

The Bayer Diabetes Care Business had €909 million ($1 billion) in 2014 sales--an almost one-to-one correspondence to the sales price. If it can keep up that sales pace, the deal should pay off quickly for Panasonic Health. The Bayer diabetes business is primarily driven by sales of the Contour blood glucose monitor products.

Werner Baumann

"We are confident that the sale of our Diabetes Care business to our long-standing partner Panasonic Healthcare, with the strong backing of KKR, will support the long-term sustainability of this portfolio," said CEO of Bayer HealthCare Werner Baumann.

Bayer will retain its Radiology business, which together with Diabetes Care have comprised its Medical Care business. Overall, Bayer's Medical Care business had €600 million ($678 million) in first quarter sales, a gain of 6% over the same quarter a year prior.

The Bayer Diabetes Care business has about 1,500 employees of the almost 119,000 people that were employed at the company in fiscal 2014. It's headquartered in Basel, Switzerland with a U.S. headquarters in Whippany, NJ. Panasonic Healthcare is based in Tokyo, Japan; it had sales of €42.2 billion ($47.7 billion) in fiscal 2014.

Panasonic Healthcare already encompasses in vitro diagnostics, blood glucose systems, medical IT as well as life sciences devices and services.

"This is another milestone in KKR's track record of partnering with leading German and Japanese corporates and in growing top health care companies," said Johannes Huth and Hiro Hirano in a joint statement from KKR. "Together, we will leverage our experience and network to create a global diabetes care solutions powerhouse in an effort to make this a transformational transaction for the diabetes care industry."

- here is the Bayer release
- and here is coverage from Bloomberg and Reuters