A sign points to the PerkinElmer Institute in Boston, Massachusetts, US, May 15, 2020. REUTERS/Brian Snyder/File Photo
On Aug. 1, 2010, PerkinElmer Inc. ( PKI.N ) agreed to sell three of its businesses to New Mountain Capital for up to $2.45 billion in cash, apparently focused on life sciences and diagnostics businesses. New name.
The latest deal comes amid a recent wave of corporate deals and spin. Last week, 3M Co ( MMM.N ) announced it would spin off its healthcare unit, with LabCorp agreeing to spin off its clinical development business. Read more
Direct lenders led by Owl Rock Capital Corp ( ORCC.N ) helped fully finance the deal, as a slowdown in the financing business has caused both traditional and direct lenders to shy away from lending on equity purchases in recent weeks.
Sign up now for unlimited access to Reuters.com
PerkinElmer said the proceeds from the distribution will be used to invest in the growth of the life sciences and diagnostic divisions and to fund future acquisitions. Diagnostics from the company It will generate 60% of the estimated $3.3 billion in revenue by 2022, with life sciences accounting for the rest.
The sale marks the conclusion of a strategic review, with other options being considered, a source familiar with the matter said.
The sale process involved strategic and private equity bidders, the source said, speaking on condition of anonymity because the discussions are confidential.
The price tag of the three segments – operations, food and corporate services – represents a multiple of around 14 to 16 times the company’s 2022 estimated EBITDA (depreciation before interest tax and depreciation), the source said.
PerkinElmer shares were up 5% at $160.87 on Monday. The transaction is expected to close in the first quarter of 2023, pending regulatory approvals.
When the deal closes, PerkinElmer will receive $2.3 billion, with the remaining $150 million to be paid later to the company, subject to the achievement of certain return milestones under New Mountain’s ownership.
The spun off businesses will continue to use the PerkinElmer brand, while the remaining life sciences and diagnostics businesses will be managed by existing management under a new name and stock ticker to be announced later, PerkinElmer said.
Evercore analyst Vijay Kumar said in a note that “the diversity on the surface will improve the company’s growth profile.”
Goldman Sachs advised PerkinElmer on the deal and Jeffries advised New Mountain Capital.
Sign up now for unlimited access to Reuters.com
Reporting by Leroy Leo in Bengaluru and David Carnevalli in New York Editing by Anirban Sen, Philip Fletcher and Matthew Lewis
Our standards: The Thomson Reuters Trust Principles.
