Carlyle Group to buy Ortho-Clinical Diagnostics for $4.15 billion

By WILL ASTOR - 1/16/2014 4:21:07 PM

The Carlyle Group has agreed to pay $4.15 billion to acquire Ortho-Clinical Diagnostics Inc. from Johnson & Johnson.

The deal is expected to close in mid-2014. Equity would be supplied by the Washington, D.C.-based asset management and private equity firm’s Carlyle Partners VI’s $13 billion U.S. buyout fund, Carlyle Group officials said Thursday.

Originally an Eastman Kodak Co. health division unit making Kodak brand blood analyzers, Ortho-Clinical Diagnostics employs some 1,100 workers at manufacturing and research and development facilities in Greece. J&J acquired Ortho-Clinical Diagnostics from Kodak for $1 billion in 1994.

Ortho-Clinical Diagnostics ranks as the eighth largest manufacturer on the most recent Rochester Business Journal list of manufacturers. The unit’s products include transfusion-donor screening and blood typing products and other medical equipment. 

The Carlyle Group announcement comes a day after Sen. Charles Schumer, D-N.Y., broke news of the impending deal. Carlyle officials would boost research and development investment in Ortho-Clinical Diagnostics and not cut back on manufacturing, Schumer predicted.

Carlyle Group managing director Stephen Wise Thursday promised “accelerated investment in research and product development and continued expansion in both emerging and established markets.”

“We expect to tap into rising demand for sophisticated medical diagnostic products and services worldwide,” he said.

Announcing plans to shed the Ortho-Clinical Diagnostics during an earnings call some 12 months ago, J&J CEO Dennis Gorsky said Ortho-Clinical Diagnostics was a good company but was no longer a good fit with J&J.
“When we look at (Ortho-Clinical Diagnostics), what we see is a business with many very good technologies, Gorsky told analysts. “(But) we also saw a business that did not have a No. 1 or No. 2 position within their respective marketplaces.

“While we certainly believe in the future of diagnostics, we think that that will more likely be in an area outside of clinical diagnostics such as molecular diagnostics, biomarkers, some of the other things that we're already working on with some of our oncology programs.”

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