Beckton Dickinson

Private equity firm Apax Partners is buying a majority share of the respiratory business of Becton, Dickinson and Co., known as BD (NYSE: BDX), to form an independent company.

In its announcement of the deal, BD isn’t disclosing the price, but says the transaction values the business at nearly $500 million. The transaction is expected to close late in BD’s fiscal year 2016, which ends on Sept. 30, or early in its fiscal year 2017, and it is subject to regulatory approval.

Apax and BD will split ownership of the new company, 50.1 percent to 49.9 percent, and the company will have an estimated annual revenues of $900 million and more than 5,000 employees. The respiratory business includes products for patients on ventilators or with tracheostomies, resuscitation, oxygen therapy, nebulizers, baby incubators, cardiopulmonary exercise testing, pulmonary testing and sleep therapy. The new company will also take over locations in Yorba Linda and Palm Springs, California; Plymouth, Minnesota; Mexicali, Mexico; Cotia, Brazil; Hoechberg, Germany and Shenzen, China.

BD, headquartered in Franklin Lakes, New Jersey, reported revenues of $2.99 billion for its fiscal quarter ended Dec. 31, 2015. Besides the respiratory division, BD sells products for diabetes care, medical lab testing, drug delivery, infection control, disease diagnosis, surgical procedures and other areas.

Steven Dyson, partner at London-based Apax Partners, says his firm has been actively looking for a respiratory devices company and was impressed by BD’s progress in the sector. Apax plans to grow the business through organic growth and acquisitions. Apax has raised funds with total investor commitments of $38 billion over more than 30 years, focused on technology, telecommunications, services, health care and consumer businesses. In health care, the firm has invested in more than 80 deals, including current investments in medical device companies, hospital operators, laboratory services and medical network services.

Apax’s recent deals have included acquiring a stake in Ideal Protein, a Gatineau, Quebec, weight-loss services provider, announced in September 2015 and selling Rhiag-Inter Auto Parts Italia SpA, a European auto parts distributor, to LKQ Corp. (Nasdaq: LKQ) $1.14 billion in a deal announced in December 2015.

Recent medical technology deals have included ResMed (NYSE: RMD) agreeing in February to buy the Brightree business management and clinical software company for $800 million. ResMed made the deal to boost its market share in the sleep-disorder breathing and respiratory sector.

Also in February medical devices deals, Stryker Corp. (NYSE: SYK) announced plans to acquire a medical devices company, Physio-Control International Inc., from Bain Capital Private Equity for $1.28 billion; the neurosurgery tools portfolio of Synergetics USA Inc. (Nasdaq: SURG); and Sage Products LLC, a medical and surgery products maker, from Madison Dearborn Partners for $2.78 billion. TE Connectivity Ltd. (NYSE: TEL) agreed to buy health-care device company Creganna Medical from Permira Advisers, the buyout firm, for $895 million.

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