Johnson & Johnson’s (NYSE:JNJ) Ortho Clinical Diagnostics unit, which makes blood screening equipment, is reportedly receiving offers of around $5 billion from private equity firms, according to sources who spoke to Reuters on Monday.
The sources said that Blackstone Group LP (NYSE:BX), KKR & Co. LP (NYSE:KKR), Bain Capital LLC, Carlyle Group LP (NYSE:CG), and BC Partners Ltd. are the firms that have submitted bids for the first round of bidding and are now waiting to hear back from Johnson & Johnson on which have made it past the first cuts. All of those private equity firms and Johnson & Johnson either didn’t respond to requests for comment or declined to comment on the sale, according to Reuters.
Johnson & Johnson announced that it was pursuing strategic alternatives for the unit back in January, and JPMorgan Chase (NYSE:JPM) was asked to manage the sale of the unit. The blood screening equipment and blood tests made by the unit are considered less effective and less profitable than new molecular diagnostics, and Reuters reports that the unit brings in $2 billion per year in sales.
Johnson & Johnson has been under scrutiny for the multitude of recalls it has been forced to make in recent years. In mid-September, the company made two recalls, one for an antipsychotic drug called Risperdal Consta and one for liquid children’s Motrin, The New York Times reported. For both of those recalls, the risk to patients was low, and no incidents involving the drugs were reported.
Large health care and pharmaceutical companies have been under pressure from price controls abroad and payments to insurers and the government. Some, like Johnson & Johnson, have responded by spinning off assets.
Pfizer Inc. (NYSE:PFE) sold its animal health business earlier this summer, making Zoetis Inc. (NYSE:ZTS) an independent company. Abbott Laboratories (NYSE:ABT) spun off its pharmaceuticals research business at the beginning of the year, making AbbVie (NYSE:ABBV) an independent biopharmaceutical company.
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