Private equity heavyweight Carlyle Group (CG) is in advanced discussions to purchase a controlling interest in two medical device sectors of Medtronic (MDT), with the transaction valuing these units at over $7 billion, insiders have shared. This prospective deal is the upshot of Medtronic's year-long evaluation of its patient monitoring and respiratory interventions units, which were also being considered for conversion into an independent public entity. Medtronic's strategic move is aimed at reshaping its portfolio, prioritizing assets such as heart and diabetes devices. In the proposed structure, while Carlyle would hold the majority, Medtronic is expected to maintain more than a 35% stake in the freshly formed company.
Medtronic, with a market capitalization of $105 billion and listed in New York, produces medical devices addressing over 70 health conditions spanning areas like cardiovascular, diabetes, medical surgery, and neuroscience. The company, headquartered in Dublin, Ireland, recently uplifted its annual profit projections, fueled by the revival of non-critical surgical procedures to pre-pandemic levels, augmenting demand for its products.
In a similar strategy-focused move earlier, Baxter International (BAX), a Medtronic competitor, initiated a strategic review of its assets. Baxter disclosed its plans in January to spin off its renal care and acute therapies departments. Later in May, it confirmed the sale of its biopharma solutions unit to a private equity consortium, which included Warburg Pincus and Advent International, in a deal worth $4.25 billion, inclusive of debt.
Carlyle stands out as a significant player in the healthcare investment domain, managing assets totaling $385 billion. The firm's past major investments encompass primary care clinic provider One Medical, which was later acquired by Amazon (AMZN) for $3.9 billion, and Ortho Clinical Diagnostics. Carlyle had bought the latter from Johnson & Johnson (JNJ) for $4 billion, and subsequently sold it to COVID-19 test manufacturer Quidel Corp (QDEL) in a transaction valued at $6 billion.
