Reuters reported today that ICU Medical (Nasdaq:ICUI) and GE HealthCare (Nasdaq:GEHC) are pursuing two business units Medtronic (NYSE:MDT) aims to sell off.
The outlet cites sources familiar with the situation, saying the companies are looking at Medtronic’s patient monitoring and respiratory interventions businesses. According to Reuters, Medtronic values these businesses between $8 billion and $9 billion.
In October, Medtronic announced its intention to pursue a separation of the company’s Patient Monitoring and Respiratory Interventions businesses. In spinning those businesses off, the company aims to create value for itself and shareholders, CEO Geoff Martha said.
Reports surfaced near the end of last year that GE HealthCare expressed interest in both units in Medtronic’s Medical Surgical portfolio. Those reports also claimed Siemens Healthineers planned to pursue the units, too. Now, Reuters says ICU Medical teamed up with a private equity firm to join the chase. The outlet says ICU Medical submitted an offer for the assets in partnership with Linden Capital Partners. Its sources claim the bid put ICU Medical through to the second round of the auction process.
GE HealthCare enlisted Carlyle Group and Clayton, Dubilier & Rice, Reuters said. They’ve been pursuing rival offers separately, the report said. According to Reuters, GE HealthCare is through to the second round of bidding, too.
Reuters said Medtronic plans to take offers for these two units while it moves to spin the businesses off. Should the coming offers fail to meet Medtronic’s valuations, the company intends to move forward with spinoffs, the report said.
A Medtronic spokesperson told Reuters that the company plans to provide additional detials “in due course.” The remaining involved parties declined to comment to the outlet, while Linden did not respond to Reuters’ requests.
Medtronic’s portfolio changes could continue
The medtech giant has taken on something of a new look over the past several years.
When it announced plans to spinoff the two businesses, Medtronic projected a completed separation in the next 12 to 18 months. The deal needs to meet closing conditions once the company finds a buyer. That includes final approval from the Medtronic board of directors, receipt of tax opinions and other regulatory approvals.
The company hinted at interest in business spinoffs more than a year ago. At the time, analysts suggested that its diabetes and spine businesses seemed the most likely spinoff options.
On the company’s November 2021 second-quarter earnings call, Martha said Medtronic had no current plans to spin off the diabetes business specifically. However, he admitted that the company spent “a lot more time” looking at portfolios and capital allocation to “make sure we’re the right owner.”
In August 2022, Martha said during the company’s first-quarter earnings call that there would be more portfolio management, including potential tuck-in acquisitions and business divestitures.
Medtronic in May announced its intent to form a new medical device company for kidney care. Medtronic and DaVita will co-own the kidney care company. Each hold equal equity stakes. An independent management team leads the company under the terms of the agreement.
Not just business unit shifts at the medtech giant
In addition to the talk of business sales and spinoffs, Medtronic has been in the news a lot recently.
Here are a few recent reports on increasing activity at the company:
- Earlier this month, the company offered early retirements as layoffs across the industry continue to pile up. Company officials have said there are “significant expense reductions” underway at the medtech giant
- Regulatory filings shed light on new details surrounding the company’s kidney care venture with DaVita. That includes a new name.
- In the midst of some uncertainty, the company received some good news in Europe. Its Affera ablation system for mapping and ablating atrial arrhythmias — including AFib — received CE mark.
- Medtronic updated its website to indicate a change in its business operating units. A promotion indicated the combination of its surgical robotics and surgical innovations units.
- A day after MassDevice reported this change, Medtronic confirmed the consolidation. It took effect on Feb. 1.
- The company also partnered with Nvidia to enable an AI Access platform. This move aims to boost the GI Genius intelligent endoscopy module’s capabilities.
- Its Medtronic Global Holdings S.C.A subsidiary priced an offering of senior notes worth $2 billion. The company wants to strengthen its resilience against the present macroeconomic headwinds.