Private equity group Platinum Equity has offered Johnson & Johnson $2.1 billion for LifeScan. J&J has until the middle of June to accept the offer for its blood glucose monitoring business.
J&J signaled its interest in offloading LifeScan and two other diabetes device units—Animas and Calibra Medical—at the start of last year. Since then, Chinese investors have reportedly weighed up bids for the units. But Los Angeles-based Platinum Equity has now emerged as the front-runner to buy LifeScan and its portfolio of glucose monitoring products.
As it stands, the bid is a binding offer from Platinum Equity, not a done deal. But both companies put out simultaneous statements about the offer and Platinum Equity is presenting its bid as the result of close talks with J&J.
“We have worked closely with Johnson & Johnson to craft a divestiture solution for LifeScan that would create a global standalone business and set the stage for continued investment in growth and innovation,” Platinum Equity partner Jacob Kotzubei said in a statement.
Platinum Equity, which was founded by Detroit Pistons’ owner Tom Gores, runs a $6.5 billion global buyout fund and has a particular interest in making leveraged buyouts of assets being offloaded by big businesses. Once in charge, Platinum Equity applies its operational experience and, in keeping with the M.O. of private equity groups, makes cuts to increase the value of the business.
In the case of the J&J unit, Kotzubei talked up the prospects of a seamless transition with current LifeScan president Valerie Asbury remaining at the helm. But the experiences of companies as varied as Neovia Logistics Services, Valpak and the San Diego Union-Tribune suggest layoffs may form part of Platinum Equity’s strategy.
If J&J accepts the bid by the mid-June deadline, the takeover is expected to go through by the end of the year. In the interim, J&J will discuss the offer with works councils.