The Carlyle Group is in exclusive negotiations with Medtronic over the potential acquisition of a majority stake in its patient monitoring and respiratory care divisions at a $7 billion valuation.
Medtronic had originally announced plans to spin off the two Medical Surgical units last year following a slump in growth. The respiratory division was hit by supply chain shortages and a fall-off in COVID-related ventilator demand, while the patient monitoring business dealt with the end of its own pandemic-era jump in pulse oximeter sales.
The announcement drew early interest from strategics Siemens Healthineers and GE Healthcare, which prompted Medtronic to consider an outright sale of the assets. For Medtronic, a sale provides greater certainty than the IPO alternative, particularly given the choppy market reception for offerings like Johnson & Johnson's consumer unit Kenvue (down 24% since it went public in May).
This week, Reuters reported that Carlyle is in exclusivity and nearing a deal to acquire a 65% majority stake in the two business units, with Medtronic retaining a 35% position. Medtronic had previously disclosed that the units contribute a combined $2.2 billion in revenue.
If successful, Carlyle would come out on top of a lengthy sale process, kicked off in early 2023, that included second-round interest from Clayton, Dubilier & Rice and a joint Linden-ICU Medical proposal, along with GE HealthCare.
Earlier reports following March first-round bids pointed toward a valuation of between $8 - $9 billion — Carlyle's lighter offer and the lengthened timeline indicate the process softened somewhere along the way.
Carlyle is working to line up a $2.5 billion debt financing package, reaching out to both banks and private credit, per Bloomberg.