ConvaTec is said to weighing a sale or even an initial public offering next year, even as interest in the tax inversion such a deal would bring mounts from players including C.R. Bard (NYSE:BCR), CareFusion (NYSE:CFN) and 3M Cos. (NYSE:MMM), Reuters reported.
ConvaTec, which is domiciled in Luxembourg, was bought Bristol-Myers Squibb for $4.1 billion in 2011 by private equity firms Nordic Capital and Avista Capital Partners, with 3M also in the running for a spell.
Although ConvaTec would review any offer made before 2015, it plans to focus on boosting its value before soliciting buyers or launching an IPO, "people familiar with the matter" told Reuters. ConvaTec cut nearly 120 employees from its roster in Skillman, N.J. earlier this year in a move aimed at consolidating space rather than restructuring.
Bard and CareFusion would be able to re-incorporate in Luxembourg, the same tax inversion structure as Medtronic $43 billion merger with Covidien. The inversion frees up cash earned overseas, allowing it to be spent in the U.S. without paying the higher U.S. corporate tax rate. But inversion deals are drawing negative attention in Washington, where Republicans want to reform the corporate tax rate to make them irrelevant and Democrats want to eliminate inversions altogether.
If Congress does act to alter the laws regarding inversions, the Reuters sources said, an offer could come before 2015 to take advantage of the lower tax rate while it’s still available.
ConvaTec today said its 2nd-quarter losses rose more than 62% on sales growth of 2.4%, reporting net losses of -$59.4 million on sales of $438.2 million for the 3 months ended June 30.