Hillrom has agreed to sell certain surgical consumable products and related assets to an affiliate of Audax Private Equity for $170 million in cash. The transaction is subject to customary closing conditions and is expected to be completed in Hillrom's fiscal fourth quarter 2019.
"The sale of these surgical products will strengthen our ability to focus our resources across our portfolio as we continue to build a differentiated suite of connected solutions for patients and caregivers," Hillrom President and CEO John P. Groetelaars said in a statement. "This transaction underscores our strategic focus on high-growth, high-margin categories where Hillrom can demonstrate leadership and supports our commitment to deliver on our promise of Advancing Connected Care™. We are grateful to our teams in Caledonia, Michigan, Las Piedras, Puerto Rico, and in the field for their dedication to our customers and to the company, and we are confident they will thrive under Audax ownership."
Hillrom's surgical consumable products include Bard-Parker® conventional and safety scalpels and blades, and a variety of other operating room accessories. These product lines are supported by nearly 500 employees who will remain with this business upon the close of the transaction.
Hillrom, which recently rebranded from Hill-Rom Holdings Inc., is a Chicago-based global medical technology company with 10,000 employees. The company focuses on improving outcomes for patients and their caregivers by advancing connected care. Hillrom innovations touch over 7 million patients each day, according to the company.
On a pro forma basis for fiscal 2019, the divested products are expected to generate annual revenue of approximately $100 million and contribute approximately 20 cents in adjusted earnings per diluted share. The sale of these products to Audax does not qualify for GAAP treatment as a discontinued operation, and therefore historical sales and earnings results will not be recast to reflect the divestiture. The company will provide additional information on its fiscal third quarter earnings conference call.
Goldman Sachs & Co. LLC acted as exclusive financial adviser to Hillrom on the transaction and Jones Day acted as legal adviser.
Audax Group is an alternative investment manager with offices in Boston, New York, and San Francisco. Since its founding in 1999, the firm has raised over $25 billion in capital across its private equity and private debt businesses. Audax Private Equity has invested over $5 billion in more than 125 platforms and 775 add-on companies.