KKR-owned Panasonic Healthcare agrees $1.1b Bayer bolt-on
Panasonic Healthcare, the Japanese medical equipment manufacturer in which KKR acquired a majority stake last year, has agreed to buy Bayer’s diabetes care business for EUR1.02 billion ($1.15 billion).
Panasonic Healthcare is already a leading manufacturer of blood glucose monitoring meters and sensors for diabetics. These products account for roughly half of the company's EBITDA. The bolt-on of Bayer Diabetes Care (BDC), which also produces blood glucose monitoring systems, consolidates its global footprint.
The Bayer unit is present in 125 countries and generated sales of EUR909 million in 2014. Panasonic Healthcare's sales came to JPY134.3 billion ($1.09 billion) for the financial year ended March 2013. There is an existing business relationship between the two companies, with BDC having marketed and sold Panasonic Healthcare products for more than 20 years.
"Together we will leverage our experience and network to create a global diabetes care solutions powerhouse in an effort to make this a transformational transaction for the diabetes care industry," Johannes Huth, KKR head for Europe, Africa and the Middle East, and Hiro Hirano, the company's Japan CEO, said of the BDC acquisition in a joint statement.
Nearly 350 million people live with diabetes globally, up from an estimated 30 million in 1985, according to the World Health Organization. The rate of diagnoses is expected to rise, particularly in low and middle-income countries.
KKR paid JPY165 billion for an 80% stake in Panasonic Healthcare in a deal announced last September. By the time the transaction closed in April, KKR's Capstone operations unit was already working with the company on a number of potential bolt-on acquisitions.
Japanese conglomerate Panasonic still holds the remaining 20% in Panasonic Healthcare. It decided to offload a majority interest in the non-core business in order as part of a company-wide restructuring initiative, but wanted a partner with medical knowledge and capital to assist in the future growth of the unit. Cross-border M&A was a key consideration.
Panasonic Healthcare, which also produces biomedical laboratory equipment and medical information systems, has manufacturing facilities overseas and sales and marketing resources in Europe and the US, but BDC represents its first overseas acquisition.
Bayer is a German multinational that specializes in health care, agriculture and high-tech polymer materials. Its sales came to EUR42.2 billion in the 2014 financial year.
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