The deal: Carlyle Group buyout of Ortho Clinical Diagnostics from Johnson & Johnson
The price tag: $4.2 billion
Status: Closed in June 2014
Why it matters: Private equity came to the rescue of Johnson & Johnson ($JNJ) in the form of the Carlyle Group, showing the variety of suitors available to med tech sellers. Ortho Clinical wasn't fast-growing enough to attract much interest from growth-focused, publicly traded companies, but the unit's size and steady profitability made it attractive to nonstrategic bidders.
Indeed, J&J 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.
|William E. Conway Jr., Carlyle Group co-CEO|
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.
A joint bid from Danaher and private equity firm Blackstone Group was reportedly turned down. Because J&J's desire to sell Ortho Clinical was well publicized, the sale seemed to go in slow motion, but in the end, J&J chose the long-expected bidder who seemed to have the most interest all along.
Under the Carlyle Group's helm, Ortho Clinical has launched the acute kidney injury diagnostic in U.S. hospitals in partnership with the test's developer, Fierce 15 member Astute Medical.
Meanwhile, J&J is trying to sell off another piece of its device empire. Stentmaker Cordis is for sale at a price tag of $1.5 to $2 billion. It also makes a variety of guide wires and catheters.
Ortho-Clinical rolls out acute kidney injury diagnostic in the U.S.
J&J looks to sell off Cordis for as much as $2B
J&J will sell Ortho Clinical Diagnostics to Carlyle for $4B plus