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J&J sells diagnostics unit to private equity firm

Ortho-Clinical Diagnostics acquired by the Carlyle Group

Johnson & Johnson (J&J)Johnson & Johnson has agreed to sell its clinical diagnostics business to private equity firm Carlyle Group for $4.15bn as it continues to narrow its focus.

The future of the Ortho-Clinical Diagnostics (OCD) unit - which specialises in blood screening products for viruses such as HIV and hepatitis and other factors such as cholesterol, has been under discussion for at least a year and was officially put up for sale last September.

Overall J&J's diagnostics operations have been under pressure of late, with reported revenues falling nearly 8 per cent in the first nine months of 2013 to a little over $1.4bn, and the company wants to focus on higher-growth divisions such as pharmaceuticals and consumer care. It has already sold off other diagnostics assets such as the RhoGAM range and certain Virco products.

The company has said it will discuss the OCD divestment further during its annual results meeting later today, but so far has not indicated what it intends to do with the money raised.

"OCD plays an important role in healthcare, and we're confident that it is well positioned to serve the interests of its patients, customers and employees," commented J&J chief executive Alex Gorsky, who added the divestment is "a result of our disciplined approach to portfolio management".

Raritan, New Jersey-based OCD will operate as an independent company focuses on in vitro diagnostics, and the company's president Eric Compton said the acquisition by Carlyle would allow it to invest in "new, innovative products and services" and increase sales of the current portfolio internationally.

Carlyle has a division specialising in healthcare transactions and raised $13bn from investors last November to fund a new round of buyouts. The offer for OCD is binding, and J&J's preliminary acceptance period ends on March 31. If antitrust clearances come through the deal should complete in the middle of this year.

In the past the group has taken over several healthcare companies, including contract research organisation (CRO) PPD in a $3.9bn deal in 2011 and packaging specialist Chesapeake last year for an undisclosed sum.

Carlyle is reported to have been one of three companies vying for OCD, with rival $4bn-plus bids said to have been received from Danaher/Blackstone Group and CVC/Leonard Green & Partners.

Article by
Phil Taylor

21st January 2014

From: Sales

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