Carlyle Group Readies Funds for Johnson & Johnson Deal


At the Carlyle Group (NASDAQ:CG), the proverbial ball is beginning to roll on a recently proposed acquisition of Johnson & Johnson’s (NYSE:JNJ) ortho clinical diagnostics unit. Monday, source reported to Reuters that the private equity firm is preparing the $3.7 billion in financing it needs to underwrite its purchase of the company, which makes in vitro diagnostics products, blood screening equipment, and laboratory blood tests.

The Carlyle Group’s financing for the acquisition is composed of approximately $2.15 billion in loans, 1.15 billion in bonds, and between $300-400 million in revolving credit. The final offer price is expected to weigh in around the $4.1 billion to $4.5 billion range, according to Reuters; those numbers include equity and $3.3 billion in funded debt.

AsĀ previously reported, speculation arose in late December that the Carlyle Group was closing in on an agreement to acquire the ortho clinical diagnostics unit from Johnson & Johnson. It was then estimated that the deal could be worth as much as $4 billion; the Carlyle Group prevailed over rival bidders, including the Blackstone Group and Danaher Corp., to win exclusivity on the potential acquisition until January 17.

Johnson & Johnson’s diagnostics and blood testing unit is a smaller player in the industry, where larger companies like Siemens AG, Roche Holding AG, Abbott Laboratories, and Danaher Corp. prevail. As such, the Carlyle Group reported earlier in the year that it would like to explore strategic alternatives for the business, a process which it believes may take as long as 12-24 months to thoroughly investigate, per Reuters.

As previously reported, the Carlyle Group has also recently overtaken several other healthcare industry businesses in the past few years, including a clinical drug testing company, as a result of a $3.9 billion dollar deal with Hellman & Friedman, and a nursing home operator, ManorCare, which it bought for $6.3 billion in 2007, per data from the New York Times.

Leading the deal are banks Barclays and Goldman Sachs, both of which are also advising the transaction. JP Morgan & Chase is also advising on the sale of the unit. Discussions between the Carlyle Group and Johnson & Johnson are ongoing, but if no hang-ups occur, Carlyle expects the deal to be signed by the end of the week.

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