In a significant development nearly a year after Medtronic’s announcement of its intention to spin off its patient monitoring and respiratory interventions divisions, the search for a buyer for these business units appears to have come to a conclusion. The Carlyle Group, a prominent private equity firm, is reportedly in exclusive negotiations to acquire both divisions, with the deal anticipated to surpass $7 billion. In this arrangement, Medtronic is expected to retain approximately a one-third stake in the newly formed company, with Carlyle assuming majority ownership.
Although neither Carlyle nor Medtronic has officially commented on the reported acquisition, unnamed sources with knowledge of the matter revealed these details to Reuters. This development has drawn investor attention, with Medtronic’s stock experiencing a brief decline of approximately 1.4% following the news. Carlyle, too, witnessed a decrease in its stock value, falling about 2% from the time of the report.
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Medtronic initially disclosed its plans to separate these two business units in late October 2022, with the intention of combining them into a single entity and subsequently spinning them out as an independent company within the following 12 to 18 months. This strategic move was prompted by declining sales in both divisions: the respiratory division faced challenges due to supply chain disruptions and reduced demand for ventilators post-peak COVID-19 pandemic, while the patient monitoring business was impacted by decreased pulse oximeter sales, influenced by pandemic-related fluctuations in demand.
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Reports of potential buyers for these divisions began to emerge towards the end of last year, with Siemens Healthineers and GE HealthCare among the interested parties, along with several unnamed private equity investors. Carlyle’s entry into the fray was publicly disclosed in March of this year, alongside other contenders such as ICU Medical, backed by PE investor Linden Capital Partners. These developments pointed towards a potential deal valued at over $7 billion, with some reports suggesting it could range from $8 billion to $9 billion.
The pending acquisition by Carlyle Group represents a significant step in the evolution of these business divisions and the broader landscape of healthcare technology.
