3M (NYSE:MMM) said today that it agreed to pay more than $6.7 billion to acquire wound care giant Acelity, including its debts, from the private equity consortium that took KCI private for $6.3 billion back in 2011.
San Antonio, Texas-based Acelity, which registered for an initial public offering last month, was formed after Apax Partners and a pair of Canadian pension funds took Kinetic Concepts Inc. private in 2011. It posted sales of $1.5 billion last year, 3M said.
The $6.73 billion deal is slated to close during the second half of the year. 3M, which last month cut its outlook for the rest of the year and announced layoffs for 2,000 workers, said it plans to fund the buyout with cash and new debt.
“Acelity is a recognized leading provider of advanced wound care technologies and solutions and an excellent complement to our healthcare business,” CEO Mike Roman said in prepared remarks. “We are excited to bring Acelity’s technologies and dedicated employees to our team. Together, we will apply 3M science to bring differentiated offerings to key wound and operative care solutions worldwide.”
“Today, KCI embarks upon a new era in its long history as a pioneer in healthcare,” added Acelity CEO Andrew Eckert. “The combination of KCI with 3M will accelerate the reach of a business that is a leader in innovation, customer experience and clinical and economic evidence. Backed by the resources and expertise of 3M, KCI will be able to offer clinicians and patients even more compelling solutions designed to speed healing and improve outcomes. I would like to thank Apax, CPPIB and PSP Investments for their close partnership and strategic direction over the years shaping KCI into a premier global advanced wound care company.”
3M said it expects the deal to add 25¢ to adjusted earnings per share in the first year after closing and cut the range on its share buyback to $1.0 billion to $1.5 billion, down from $2.0 billion to $4.0 billion previously.
Credit Suisse advised 3m on the transaction, with Cleary Gottlieb Steen & Hamilton as legal advisors. JP Morgan and Goldman Sachs advised Acelity’s owners, with Simpson Thacher & Bartlett and Jackson Walker as counsel.
MMM shares, which closed down -1.8% at $186.07 apiece yesterday, were off another -1.1% today in pre-market trading, to $184 even.