
Private equity makes another medtech grab
At long last, the engineering conglomerate Smiths Group managed to offload its medical division this week. A subsidiary of funds advised by the US firm TA Associates has paid $2.3bn for the unit, which makes hospital equipment such as drug pumps, pulse oximeters and IV catheters. The deal is one of the largest private equity purchases of a medtech in a decade – but, judging by the 10% fall in Smiths’ share price since, investors were expecting a still higher price. It is unclear that the company could have got much more for Smiths Medical, though: the unit’s revenues are forecast to expand even more slowly than Smiths Group, which itself can only muster an annual growth rate of 4%. The sale will net Smiths an initial $1.8bn in cash with a potential $200m earnout to follow, and Smiths will retain a 30% stake in the holding company TA will create. Smiths has tried to offload the medical unit several times, most recently laying plans for an IPO in mid-2020. This was shelved last March, partly so Smiths could focus on making ventilators for the UK government as it raced to cope with Covid-19 hospitalisations.
Top 5 private equity medtech deals of the past decade | |||||
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Announcement Date | Acquirer | Target | Value ($bn) | Focus | Notes |
Jul 2011 | Apax Partners | Kinetic Concepts/ Acelity | 6.1 | Wound care | Sold its Lifecell unit to Allergan for $2.9bn in 2016; bought by 3M for $6.7bn in 2019 |
Nov 2018 | Veritas Capital & Elliott Management | Athenahealth | 5.7 | General hospital & healthcare supply; healthcare IT | Simultaneously merged with Virence Health, formerly a GE subsidiary |
Jan 2014 | Carlyle Group | Ortho-Clinical Diagnostics | 4.2 | In vitro diagnostics | Floated in 2021, raising $1.5bn |
Nov 2014 | EQT Partners | Audiology Solutions business of Siemens | 2.7 | Hearing aids | Renamed Sivantos; merged with Widex in 2018 |
Aug 2021 | TA Associates | Smiths Medical subsidiary of Smiths Group | 2.3 | Anaesthesia & respiratory; patient monitoring | Spin-off had been delayed in March 2020 |
Source: Evaluate Medtech, company websites. |