J&J Said to Agree to Sell Ortho Unit to Carlyle for $4 Billion

Jan 16, 2014 12:01 am ET

Jan. 16 (Bloomberg) -- Johnson & Johnson agreed to sell its Ortho Clinical Diagnostics unit to Carlyle Group LP for about $4 billion and may make an announcement as soon as today, people with knowledge of the matter said.

Carlyle, based in Washington, plans to operate the business as a stand-alone entity after the acquisition, said one of the people, who asked not to be named because the negotiations are private. Carlyle has asked banks to line up about $3.3 billion in debt for the acquisition, with the rest funded by cash, the person said.

Ortho Clinical, which makes diagnostic equipment that tests blood for everything from cholesterol to fertility hormones, reported earnings before interest, taxes, depreciation and amortization of about $475 million in 2012, the person said. Carlyle plans to invest heavily in research and development as well as international expansion, said the person, who is familiar with the company’s strategy.

Elizabeth Gill, a spokeswoman for Carlyle, declined to comment, as did Ernie Knewitz, a spokesman for Johnson & Johnson.

The health-care products company, based in New Brunswick, N.J., received three final offers for the division including the one from Carlyle, people familiar with the situation said last month: a joint bid from Blackstone Group LP and Danaher Corp. and a combined offer from CVC Capital Partners Ltd. and Leonard Green & Partners LP.

Johnson & Johnson hired JPMorgan Chase & Co. to help it sell the business after it decided to focus on molecular diagnostics. Reuters reported previously that J&J had entered exclusive talks with Carlyle.

Health-Care Interest

Carlyle has been one of the most active private-equity bidders for health-care companies in the past couple of years, according to a person familiar with the firm’s strategies. The firm made an offer for Immucor Inc. ahead of its 2011 sale to TPG Capital as well as a bid for Life Technologies Corp. before its $13.6 billion sale last year to Thermo Fisher Scientific Inc., the person said.

It also acquired Pharmaceutical Product Development Inc. for $3.45 billion in 2011 and Healthscope Ltd. for $2.6 billion in 2010, according to data compiled by Bloomberg.

Carlyle oversees $185 billion in assets across 122 funds and 81 fund-of-fund vehicles. The firm was founded in 1987 by Daniel D’Aniello, William Conway and David Rubenstein.

--With assistance from Michelle Fay Cortez in Minneapolis. Editors: Mohammed Hadi, Elizabeth Wollman