Johnson & Johnson ($JNJ) has formally accepted the Carlyle Group's $4 billion-plus bid to snatch up its Ortho Clinical Diagnostics arm, more than two months after announcing the proposed transaction.
J&J had until March 31 to accept the binding offer, and waited until the last possible day to announce its decision, which it said follows consultations with various trade unions and employee groups. The deal is expected to close in mid-2014, and J&J will discuss any updates during its April 15 earnings call, the New Jersey-based conglomerate said.
Back in January, J&J disclosed Carlyle's $4.15 billion offer for Ortho Clinical Diagnostics after revealing more than a year ago that it wanted to sell the division. Executives were rumored to be unhappy that Ortho Clinical Diagnostics' revenue hadn't grown more rapidly compared to larger rivals including Roche ($RHHBY), Danaher ($DHR) and Abbott ($ABT), all of whom have a much bigger stake in the clinical diagnostics/laboratory blood test sector.
Ortho Clinical Diagnostics sells a number of laboratory blood tests focused on a variety of diseases, as well as blood screening equipment. But the division is far from tiny, having booked $2.16 billion in sales in 2013.
Johnson & Johnson has focused on streamlining and cutting costs, and some observers expect the company to sell other med tech business segments in the future, including its slumping blood glucose meter and insulin pump segments. The likely goal: to focus more on drug development and sales.
At the time the Ortho sale was first announced in January, J&J Chairman and CEO Alex Gorsky said, in part, in a statement that the planned transaction "is a result of our disciplined approach to portfolio management" to achieve maximum shareholder value.
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