J&J (JNJ) Accepts Platinum Equity's Offer For LifeScan Unit
Zacks Investment Research | Jun 12, 2018 10:41PM ET
Johnson & Johnson (NYSE:JNJ) has accepted a $2.1 billion offer from a private equity firm, Platinum Equity, for the sale of its LifeScan diabetes device unit. The company had announced the receipt of a binding offer from Platinum Equity in March.
The LifeScan unit makes blood glucose monitoring products and generated revenues of $1.5 billion last year.
J&J stock has declined 12.3% this year so far, which compares unfavorably with a decrease of 4% recorded by the industry .
The move was in line with J&J’s strategic plans for its diabetes business. The company has been planning to streamline its non-core assets since last year. As part of the streamlining efforts, J&J had announced the closing of operations at its Animas Corporation diabetes care unit in October last year. The company has arranged a deal with medical device maker, Medtronic, Inc. (NYSE:MDT) for the transition of patients on Animas insulin pump to Medtronic pump. Meanwhile, J&J also received an offer of $2.8 billion from Fortive Corporation (NYSE:FTV) earlier this month for its Advanced Sterilization Products business.
Moreover, sales in J&J’s Diabetes Care franchise declined 9.7% in 2017 to $1.6 billion due to price decline and competitive pressure. Thus, streamlining these assets is likely to boost margins as well cash position of the company.
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