Yunfeng, MicroPort agree international medical devices carve-out
Chinese PE firm Yunfeng Capital and Hong Kong-listed medical device manufacturer MicroPort Scientific Corporation will acquire US-listed LivaNova's cardiac rhythm management (CRM) business for $190 million in cash.
MicroPort will contribute 75% of the equity, with the remainder provided by Yunfeng Fund III, the latest US dollar-denominated fund launched by the GP. The ownership split will also be 75-25, according to a filing.
Headquartered in London, LivaNova produces a wide range of medical devices under three business units: neuromodulation, cardiac surgery, and CRM. Europe, the US, and Japan are its primary distribution markets. The CRM unit makes products like defibrillators and pacemakers for diagnosis, treatment, and management of heart rhythm disorders and heart failures. It recorded $249 million in sales in 2016, or about 20% of LiveNova's overall revenue.
Shanghai-based MicroPort’s products cover 10 medical fields including cardiology, radiology, diabetes and surgical management. It claims to have over 200 products approved for use in more than 5,000 hospitals globally. In 2014, the company partnered with LivaNova to set up a China joint venture – MicroPort Sorin CRM – in order to market LivaNova’s CRM devices in the country. The JV reported $4.9 million in revenue in 2016, down from $9 million in 2015.
“The CRM business franchise is a global business and strong regional player with attractive assets, a robust pipeline and growth potential. Its strong position in Europe complements our leadership position in China and growing presence in the United States and Emerging Markets, enabling us to further strengthen each other’s worldwide reach,” Zhaohua Chang, chairman and CEO of MicroPort, said in a statement.
Under the agreement of the transaction, Yunfeng has the right to require MicroPort to purchase its entire stake in the CRM business if an IPO or a trade sale does not occur within five years.
Yunfeng was set up by Jack Ma and David Yu, founders of Alibaba Group and Target Media, respectively, in 2010. The firm manages US dollar-denominated and renminbi funds, with the second US dollar vehicle closing at $1.1 billion in 2014. Sectors of interests include healthcare, internet, media and entertainment, financial services, logistics, and consumer.
Completion of the LivaNova deal is subject to regulatory approvals.
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