Hologic (NSDQ:HOLX) announced today that it entered into a definitive agreement to sell its Cynosure medical aesthetics business in a deal worth more than $200 million.
The Marlborough, Mass.–based company is in agreement with an affiliate of investment funds managed by Clayton, Dubilier & Rice and expected to collect net cash proceeds of approximately $138 million, according to a news release.
Approximately 825 employees will transfer with the Cynosure business under the terms of the agreement, with the transaction slated to close around the end of calendar 2019. Goldman Sachs is serving as a financial adviser to Hologic during the process, as Wachtell, Lipton, Rosen & Katz is acting as legal counsel.
UBS committed to providing debt financing and is acting as financial advisor to Clayton, Dubilier & Rice, along with Credit Suisse. Debevoise & Plimpton is serving as legal counsel for Clayton, Dubilier & Rice.
“Divesting our medical aesthetics business will enable us to focus on what we do best — helping women and their families live healthier lives through early detection of disease,” Hologic chairman, president & CEO Steve MacMillan said in the release. “Since we acquired Cynosure in 2017, it has significantly underperformed our expectations. We believe this transaction will unlock value for Hologic shareholders, and at the same time provide Cynosure and its employees the best opportunity to succeed in the medical aesthetics marketplace. Moving forward, our business development strategy remains focused on the smaller, tuck-in deals that have been performing well for us and strengthening our core franchises.”
Hologic closed its $1.65 billion acquisition of Cynosure in March 2017, paying $66 per share for a total of 17 million shares of Class A stock, representing approximately 70.6% of the company’s outstanding shares. However, it hasn’t been smooth sailing since.
A Worker Adjustment and Retraining Notification act posting in August 2018 revealed that Cynosure was looking to lay off 30 workers at its Hicksville, N.Y.-based facilities. A month later, the company had to lower the revenue expectations for Cynosure by $15 million to take into effect lost and reduced sales associated with an FDA warning which raised concerns about the validity and functionality of “vaginal rejuvenation” products and procedures.
Shares of HOLX were up 3.2% at $48.67 per share in mid-afternoon trading today.