ICU Medical challenges GE HealthCare for Medtronic units valued at $8B: report

Dive Brief:

Intravenous therapy specialist ICU Medical has joined GE HealthCare on the list of companies interested in buying Medtronic’s patient monitoring and respiratory interventions businesses, according to Reuters.
Medtronic wants to offload the two units to focus on faster-growing parts of its business and is talking to potential buyers while preparing to spin off the divisions if a deal fails to materialize.
The company is seeking $8 billion to $9 billion for the businesses, according to unnamed sources quoted by Reuters. ICU has a market cap of $4 billion and has reportedly joined forces with the private equity firm Linden Capital Partners to try to win the businesses from Medtronic.

Dive Insight:

In October, Medtronic outlined plans to spin off its patient monitoring and respiratory interventions businesses to create a new connected care company in the next 12 to 18 months. The company is still advancing those plans but is talking to potential buyers in parallel.

According to Reuters, ICU and GE HealthCare are through to the second round of bidding in the auction, as are the private equity firms Carlyle Group and Clayton, Dubilier and Rice. The two Medtronic businesses generated $2.2 billion in revenue in the company’s 2022 fiscal year. Based on that and other factors, a bid of $8 billion or more will be needed to meet Medtronic’s valuation, Reuters reports.

A spokesperson for ICU said in an email Thursday that the company would not comment on the report.

If bids for the businesses fall short of Medtronic’s valuation in the coming weeks, the medtech company reportedly plans to walk away from negotiations and commit to spinning off the two units into a new standalone company.

A successful bid by ICU would be transformational for the company. Last year, the company’s sales were $2.3 billion, suggesting the addition of the two Medtronic units would roughly double the size of the business. ICU has already grown quickly through acquisitions, with the takeover of Smiths Medical at the start of 2022 helping it grow sales by 73% year over year in its most recent annual results.

ICU paid $2.5 billion for Smiths Medical, having previously bought Pfizer’s infusion therapy business for $1 billion. The acquisition of the Medtronic units would likely be much larger, but ICU reportedly has the support of buyout firm Linden Capital.