Carlyle Group Files IPO Prospectus for New Medtronic Spin-off Entity

Oct 04, 2023 00:02 CST Updated 00:02

Medtronic

Chronic Disease Medical Device and Therapy Developer

The Carlyle Group

Diversified Investment Institutions

Source: Siyu MedTech; Editor: Jacky

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On October 2, 2023, according to a Reuters report, nearly a year after Medtronic announced its intention to spin off its patient monitoring and respiratory interventions businesses, the Carlyle Group emerged as the leading bidder for the two units.

# Carlyle Becomes a Strong Bidder for Two Major Businesses of Medtronic

According to a Reuters report last Friday, recent months have seen detailed accounts of various parties interested in two major businesses of Medtronic. These include medical technology companies such as Siemens Healthineers, GE Healthcare, and ICU Medical, as well as private equity firms like The Carlyle Group and Clayton, Dubilier & Rice (CD&R). However, The Carlyle Group has now taken the lead.

Informed sources who wished to remain anonymous told the media that Carlyle is currently in exclusive negotiations to acquire these two major businesses.The deal, which is reported to be worth more than $7 billion (approximately 51.1 billion RMB), will allow Medtronic to retain about one-third of the business shares. The company will be established as a new entity, with Carlyle Group acting as the controlling shareholder.

Currently, neither Carlyle nor Medtronic has commented on the acquisition reported in the news.

Investors seemed unfriendly to the latest news about Medtronic's plan to spin off. Shortly after the report by Reuters was released, Medtronic's stock price began to fall around noon last Friday.

In the first two hours after the news broke, its share price fell about 1.4%, from just above $79 to slightly below $78. Although the stock rebounded on Friday afternoon, it resumed its downward trend again on Monday morning, falling to around $77.64 in the first hour of trading.

Carlyle also took a negative hit from the report. From the release of the news on Friday to the first trade after the weekend, the private equity firm's stock price had fallen by about 2%, dropping from comfortably above the $30 mark to just below that level Monday morning.

# Review of Medtronic's Spin-off Plan

In late October 2022, Medtronic announced its plan to split for the first time.Patient Monitoring and Respiratory InterventionsTwo major business units. At the time, Medtronic stated that these two business units had a combined global revenue of approximately $22 billion in the company’s fiscal year 2022. They will be merged into a new single entity and spun off into an independent company within the next 12 to 18 months.

The spin-off plan comes as Medtronic reports slowing sales in both divisions: the Respiratory Interventions segment declined due to supply chain shortages and reduced demand for ventilators following the peak of the COVID-19 pandemic, while the Patient Monitoring business was hit by a drop in sales of pulse oximeters, again becoming a victim of pandemic-driven demand.

It wasn't until the end of last year that the first reports emerged suggesting the two businesses might be acquired by another company instead of spinning off into a completely new entity. A Bloomberg report in mid-December pointed out that Siemens Healthineers, GE Healthcare, and a group of unnamed private equity investors were the most interested buyers in this potential deal, valued at over $7 billion.

At the same time, Carlyle was not publicly announced to have joined the bidding until March this year. At that time, Reuters reported that ICU Medical, backed by private equity investor Linden Capital Partners, had entered the second round of bidding, competing with offers from companies such as GE Healthcare and Carlyle. The report suggested that the transaction price could be between $8 billion and $9 billion.

# About The Carlyle Group

The Carlyle Group (NASDAQ: CG) is a global alternative asset management company, established in 1987, with its headquarters in Washington, D.C., USA. It has over 1,575 employees across 31 offices in six continents. As of March 31, 2018, Carlyle’s assets under management totaled $201 billion, and it operated 324 investment funds.

Carlyle focuses on four major types of assets—private equity, real assets, global market strategies, and investment solutions—with investments spanning across Africa, Asia, Australia, Europe, the Middle East, North America, and South America. Carlyle possesses expertise in industries including aviation, defense and government services, consumer and retail, energy, financial services, healthcare, industrials, real estate, technology and business services, telecommunications and media, and transportation.

The Carlyle Group is one of the global private equity investment firms that entered China relatively early. Carlyle established a representative office in Hong Kong in 1998 and set up representative offices in Beijing and Shanghai in 2005. As of the first quarter of 2018, Carlyle has invested in more than 90 projects in mainland China, with a total equity investment exceeding 8 billion US dollars.

# About Medtronic

Medtronic is a global leading medical device company dedicated to improving human health and extending life. The company provides a variety of innovative medical solutions in more than 150 countries and regions, covering fields such as cardiovascular, neurological, diabetes, and surgical. Medtronic's total revenue for the fiscal year 2023 was $31.2 billion (approximately 227 billion yuan), with a market value of approximately $150 billion (approximately 1.09 trillion yuan).

Editor-in-Chief | Zhao Qing Reviewed by | Yi He Typeset by | Miya