Bristol-Myers Squibb (BMS; New York) reported that it has signed a definitive agreement to sell its ConvaTec (Skillman, New Jersey) business unit to private equity firms Nordic Capital Fund VII and Avista Capital Partners for $4.1 billion.
The deal is part of BMS' plan to focus the company on biopharmaceuticals. ConvaTec develops wound therapeutics and ostomy care products. Last December, BMS sold its Medical Imaging unit (Billerica, Massachusetts) to Avista for $525 million in cash (Medical Device Daily, Dec. 18, 2007).
"In December 2007, we announced our evolution into the leading next-generation biopharma company and that as part of the transformation we would undergo a thorough strategic review of our non-pharmaceutical assets," James Cornelius, BMS chairman/CEO, said in a statement. "Since then, we have announced the sale of Medical Imaging, the proposed carve-out initial public offering of Mead Johnson and the sale of ConvaTec.
"These decisions support our next-generation biopharma strategy," he said. "We will now have additional financial resources to expedite that strategy as we continue to work to help patients prevail over serious diseases."
Late last year, the pharmaceuticals giant said it would cut nearly 4,300 jobs worldwide, one-10th of its workforce, close more than half its manufacturing plants by 2010, and explore selling two divisions, including ConvaTec and its Mead Johnson Nutritionals (Evansville, Indiana) business (MDD, Dec. 7, 2007).
BMS, like other big pharmaceutical firms, has faced increased competition from generic drug makers as patents expire. Other companies that have made similar large-scale cuts include Pfizer (New York) and Johnson & Johnson (New Brunswick, New Jersey) (MDD, Aug. 1, 2007).
Dave Johnson, who will remain CEO of ConvaTec, said, "I am excited to partner with Nordic Capital and Avista Capital Partners as we transition ConvaTec to a stand-alone company. Both firms have a proven track record of success in the healthcare industry. They are passionate believers in ConvaTec's future growth and will be strong supporters of the ConvaTec business. Their deep experience in guiding strategy and backing companies will help take ConvaTec to the next level of success as an independent company."
Last summer, in its most recent product launch, ConvaTec reported the U.S. availability of the ConvaTec moldable technology line of ostomy skin barriers, designed to increase convenience while offering improved protection of the skin surrounding the stoma (MDD, August 16, 2007).
The transaction is subject to customary regulatory approvals and delivery of ConvaTec's audited 2007 financial statements. The closing is anticipated in the third quarter of 2008.
Nordic Capital and funds associated with Avista have guaranteed the deal under a purchase agreement. The purchaser has entered into a fully committed loan agreement which provides for funding by the lenders with no material conditions other than the conditions under the purchase agreement and customary conditions relating to the delivery of closing documents and financial information as well as conditions related to the status of the purchaser.
Citigroup Global Markets and Morgan Stanley served as financial advisors for BMS and Cravath, Swaine & Moore served as legal counsel for the company.
Bear, Stearns International acted as financial advisor for Nordic Capital and Avista Capital Partners and White & Case served as legal counsel to Nordic Capital and Avista.
AHC Media, publisher of Medical Device Daily, also is an Avista Capital Partners company.
In other dealmaking news, Applied Precision (Issaquah, Washington), a provider of imaging, measurement and analysis systems for the life sciences industries, reported that it has sold its Life Sciences business unit to a group led by senior management and Telegraph Hill Partners (San Francisco).
The resulting company, Applied Precision, will be headquartered in Issaquah.
Ron Seubert will continue as CEO/chairman, Joe Victor as president, and Steve Reichenbach as CFO.
Applied Precision previously sold its Semiconductor division in December 2007 to Rudolph Technologies (Flanders, New Jersey).
"I am thrilled to have the opportunity to continue to lead Applied Precision in this next phase completely focused on our products in the life sciences and OEM markets," said Seubert. "Our collaboration with Telegraph Hill Partners provides a breadth of experience in the life sciences industries that will be extremely beneficial as we expand our product lines and grow our business for the future."
"We are delighted to partner with senior management in the acquisition of Applied Precision," said Robert Shepler, managing director of Telegraph. "Applied Precision has a great reputation for technology and innovation and we look forward to building on these core strengths and helping the team bring their products to a wider audience in the life science marketplace."
Effective April 29, Applied Precision acquired all of the assets of the Life Sciences business unit, including the DeltaVision product line focused on microscopy based imaging systems, and its OEM products, including the arrayWoRx scanner platform and precision control solutions.