Bristol-Myers Squibb (BMS; New York) reported that it will sell its Medical Imaging (MI) unit in Billerica, Massachusetts, to private equity firm Avista Partners for $525 million in cash.
The news comes just two scant weeks after the pharma giant presented a massive restructuring plan that 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 other divisions, ConvaTec (Skillman, New Jersey), a wound-care products supplier, and its Mead Johnson Nutritionals (Evansville, Indiana) business.
“As Bristol-Myers Squibb continues to focus on evolving into a next-generation BioPharma company, we determined the best way to maximize the value of Medical Imaging for shareholders was to sell this business and reinvest the proceeds into our pharmaceutical research, development and commercialization efforts,” said James Cornelius, CEO of BMS. “At the same time, we believe that Medical Imaging can maximize its potential under new ownership, and Avista has a proven track record of success in the healthcare field.”
The transaction is expected to be complete by the end of January, subject to customary regulatory approvals, at which time BMS MI will operate as an independent company under a new name.
Don Kiepert, the founder and former president/CEO and chairman of Point Therapeutics (Wellesley Hills, Massachusetts), will become the CEO of the company.
“I am thrilled to be partnering with the existing management team of BMS MI and Avista Capital as we transition BMS MI to an independent company,” said Kiepert.
The purchase marks Avista’s sixth investment in the healthcare industry. The private equity firm recently purchased the fluid management and access businesses of Boston Scientific (Natick, Massachusetts) for $425 million.
Also in 2007, Avista made healthcare investments in BioReliance (Rockville, Maryland) and VWR International (West Chester, Pennsylvania) and in 2006 it reported investments in Nycomed (Zurich, Switzerland) and MedServe (Bellaire, Texas).
J.P. Morgan Securities served as financial advisor for BMS; Cravath, Swaine & Moore served as legal counsel for the company. Weil, Gotshal & Manges served as legal counsel for Avista.
BMS MI is a supplier of medical imaging products for nuclear and ultrasound cardiovascular diagnostic imaging procedures.
Inverness Medical Innovations (IMI; Waltham, Massachusetts) reported that it has finalized its $36 million acquisition of Matritech (Newton, Massachusetts), that deal first disclosed in late August.
The deal was structured as an asset purchase under which a newly formed subsidiary of IMI acquired substantially all of the assets of Matritech for 616,713 shares of IMI common stock, valued at about $36 million.
In addition, IMI has agreed to pay Matritech up to $2 million of incremental consideration in cash and/or IMI common stock, conditioned on the achievement of certain revenue targets for the upcoming 12-month period.
Matritech is a developer of protein-based diagnostic products for the early detection of cancer. It is using its patented proteomics technology to develop diagnostics for the detection of a variety of cancers.
The company’s first two products, the NMP22 Test Kit and NMP22 BladderChek Test, have been FDA-cleared for the monitoring and diagnosis of bladder cancer. The company has discovered other proteins associated with cervical, breast, prostate, and colon cancer.
In other dealmaking activity:
• OSI Systems (Hawthorne, California), a provider of electronic products for applications in the healthcare and security industries, reported that it has increased its ownership in Spacelabs Healthcare (Issaquah, Washington), listed on the London AIM Exchange, to more than 90%.
OSI said it intends, within the next 10 business days, to complete the purchase of the remaining minority shareholding of Spacelabs for about $15 million. As a result of the transaction, Spacelabs will be a wholly-owned subsidiary of OSI.
In October 2005, OSI listed the stock of Spacelabs on the London AIM Exchange, selling 20% of the shares to institutional investors and retaining 80% ownership. Through the offering, the company raised about $27 million net of expenses.
Spacelabs used the proceeds raised in that offering to repay about $22 million of its $57.3 million debt to OSI - leaving a balance owed to OSI of about $35 million.
OSI originally acquired Spacelabs in March 2004 for a purchase price of $57 million.
Spacelabs was previously a unit of Instrumentarium (Helsinki, Finland), which was acquired by GE Medical Systems (Waukesha, Wisconsin) in a $2 billion deal in October 2003.
To complete the acquisition of Instrumentarium, GE agreed with both U.S. and European regulatory agencies to divest Spacelabs’ business worldwide. As part of those agreements, GE committed to provide the acquirer of Spacelabs with the rights to distribute and market certain GE products and accessories.
The mandated sale made it very much a buyers’ market, with the $57 million figure representing a fraction of the $140 million Instrumentarium paid for Spacelabs in July 2002.
Spacelabs is comprised of several healthcare businesses: patient monitoring, anesthesia, pulse oximetry, osteoporosis diagnostics, clinical trials and now cardiology.
• Genstar Capital a middle-market private equity firm focused on investments in selected segments of the life sciences and healthcare services, industrial technology, business services and software services, reported that it has completed its previously disclosed $797 million acquisition of PRA International (Reston, Virginia), a global clinical research organization.
“Our new status as a private company will enable our entire work force to be even more focused on attaining our common goal to provide outstanding clinical research trials for our clients,” said Terrance Bieker, CEO of PRA, who will continue in that role.