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Jan 16, 2014

J&J Sells Dx Unit to Carlyle Group for $4.15B

  • The Carlyle Group will acquire Johnson & Johnson’s in vitro diagnostics business Ortho-Clinical Diagnostics (OCD) for $4.15 billion, both said today, in a deal the buyer said reflected the expectation of continued growth for diagnostics as it becomes a greater component of clinical healthcare.

    “Through accelerated investment in research and product development and continued expansion into both emerging and established markets, we expect to tap into rising demand for sophisticated medical diagnostic products and services worldwide,” Stephen H. Wise, managing director of The Carlyle Group, said in a statement from the global alternative asset manager.

    The deal is subject to an acceptance period that will end March 31 unless it is extended. During that time, J&J said, it will consult with relevant works councils and trade unions. If the offer is accepted by Johnson & Johnson, the proposed transaction would be expected to close toward the middle of the year, pending fulfillment of certain conditions, including, but not limited to, the receipt of applicable antitrust clearances and other customary closing requirements.

    "Ortho-Clinical Diagnostics plays an important role in healthcare, and we're confident that it's well positioned to serve the interests of its patients, customers, and employees," said Alex Gorsky, J&J’s chairman and CEO, in a company statement. "This transaction is a result of our disciplined approach to portfolio management in order to achieve the greatest value for Johnson & Johnson."

    J&J said it will further discuss the OCD transaction on January 21, during its scheduled quarterly earnings meeting.

    OCD provides in vitro diagnostic products for the early screening, diagnosis, monitoring, and confirmation of diseases by clinical laboratories and the transfusion medicine community worldwide, with emphasis on supporting hospitals, laboratories, and blood centers worldwide.

    OCD is headquartered in Raritan, NJ, with manufacturing operations in Rochester, NY; Pompano Beach, FL; and Pencoed, Wales, U.K. The business operates in 130 countries.

    A year ago this month (January 22, 2013), Gorsky told analysts on a conference call that J&J was “exploring all options, including a possible divestiture” of OCD, saying at the time, “When you look at diagnostics, we have good technology and a lot of good businesses, but they are not number one or two in the market.”

    News reports at the time had OCD as fifth-largest, though Roche Diagnostics’ Business Overview 2013 had the J&J unit ranked fourth, preceded by Siemens (third), Abbott Laboratories (second), and Roche (first).

    The Carlyle Group said an undisclosed amount of equity for the transaction comes from its $13 billion U.S. Buyout fund Carlyle Partners VI, which completed fundraising in November 2013 with 269 investors from 43 countries.

    Carlyle was among two potential suitors for OCD, competing with a combination of Blackstone Group and Danaher to buy the business from J&J, according to The Wall Street Journal. In September, Reuters identified Abbott Laboratories and General Electric as possible bidders.



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