3M Co., the manufacturer of Post-it notes, Scotch tape and Ace bandages, has agreed to purchase San Antonio medical technology company Acelity in a deal worth around $ 6.7 billion.
The transaction, announced Thursday, comes two weeks after Acelity, formerly known as Kinetic Concepts Inc., filed plans to become public for the third time in the company's history. The company and its KCI subsidiaries are best known for their negative pressure ulcer therapy, used in wound healing and surgical management.
The acquisition, which includes $ 2.4 billion in debt, is expected to close in the second half of this year.
At ExpressNews.com: San Antonio wound care company films for original public offerings
"Today, KCI begins a new era in its long history as a pioneer in health care, Sa Acelity CEO R. Andrew Eckert in a statement. "The combination of KCI with 3M will accelerate the reach of a business leader in innovation, customer experience, and clinical and financial evidence."
Acelity gave no idea why it chose to scrape IPO and accept handle 3M. Spokeswoman Maggie Fairchild said the company would have no comment beyond the statement.
In a research paper Thursday, analysts of William Blair said that Acelity is "no steal, but (a) solid long-term strategic deal" for 3M. [1
Minnesota-based 3M expects Acelity to strengthen its Medical Solutions business as the Acelity Supply will further expand our offering in advanced wound care, which is a $ 8 billion market growing in the midst of a single digit, "3M CEO Mike Roman said in a conference call with analysts, according to a transcript .
"The growth in this market will continue to be driven by a number of macro trends," he added. "This includes rising prices for chronic health conditions, such as obesity and diabetes, creating the need to effectively deal with complex and persistent wounds."
Acelity is owned by a consortium of funds advised by the London-based private equity firm Apax Partners, Canada's Pension Plan Investment Board and the Pension Investment Board. The Apax Group acquired the company in a leveraged buyout of over $ 6 billion in 2011. The company's name was later changed to Acelity from Kinetic Concepts.
The Apax led group's ownership of Acelity was highlighted by $ 2.9 billion of its regenerative medicine business, known as LifeCell, to Pharmaceutical giant Allergan in 2017. Acelity's acquisition included the 2013 acquisition of UK wound care development company Systagenix for $ 486 million .
An archive with the Securities and Exchange Commission two weeks ago showed that the newly created KCI Holdings Inc. will be public and serve as a holding company for Acelity. The filing gave no details about the size of the offer. However, the Apax-led group was expected to continue owning a majority of the voting shares.
Acelity lost $ 138 million in $ 1.47 billion in revenue last year. Contributing to the red ink was around $ 176 million in interest on its debt.
The company was founded as a specialized medical bed by Dr. James Leininger in 1976.
Acelity had over 1,000 local employees in February, announcing that it was cutting around 200 jobs in San Antonio and 260 in total. The workforce was around 4,700 at the end of last year.
At ExpressNews.com: San Antonio's Acelity Slashing 260 Jobs
Bloomberg reported Thursday morning that 3M is turning to acquisitions as it fights in a number of markets. 3M shares doubled 13 percent last week after it revealed weakness across the business areas. It was announced that there were 2000 jobs.
Analysts with Bloomberg Intelligence described Acelity as a "good fit" for 3M.
"Health is one of 3M's fastest growing segments, and consistently generates about 30% operating margin and is a priority growth platform," analysts said in a brief comment.
Patrick Danner is a San Antonio-based personnel writer covering bank and Read him on our free website, mySA.com, and at our subscriber site, ExpressNews.com. | email@example.com | Twitter: @AlamoPD