Aug 1 (Reuters) - PerkinElmer Inc on Monday agreed
to sell three of its businesses to private equity firm New
Mountain Capital for up to $2.45 billion in cash, as it looks to
focus on its life sciences and diagnostics businesses under a
The latest deal is among a wave of recent corporate
carve-outs and spinoffs. Last week, 3M Co announced it
would spin off its healthcare unit, while Labcorp agreed to
separate its clinical development business.
Direct lenders led by Owl Rock Capital Corp helped
finance the deal entirely, amid a slowdown in the business of
acquisition financing as both traditional and direct lenders
have pulled back from lending on leveraged buyouts in recent
Proceeds from the divestiture will be used to invest in
growth in the life sciences and diagnostics segments and to fund
future acquisitions, PerkinElmer said. Diagnostics will generate
around 60% of the companys 2022 estimated revenue of $3.3
billion, while life sciences will account for the remainder.
The sale marked the conclusion of a strategic review where
other options, including a spinoff of the units, were also
considered, according to a source familiar with the matter.
The sale process included both strategic and private equity
suitors, the source said, requesting anonymity as these
discussions were confidential.
The price tag of the three units - applied, food, and
enterprise services - implies a valuation of about 14 to 16
times the company's 2022 estimated EBITDA (earnings before
interest taxes depreciation and amortization), the source said.
Shares of PerkinElmer closed up 5% at $160.87 on Monday. The
transaction is expected to close in the first quarter of 2023,
subject to regulatory approvals.
PerkinElmer will receive $2.3 billion when the deal closes,
while the remaining $150 million will be paid to the company
later, contingent on the businesses reaching certain return
milestones under New Mountain's ownership.
The divested businesses will continue to use the PerkinElmer
brand, while the life sciences and diagnostics businesses that
remain will be run by the existing management under a new name
and stock ticker that will be announced later, PerkinElmer said.
"The divestiture on (the) surface improves the growth
profile of the company," Evercore analyst Vijay Kumar said in a
Goldman Sachs advised PerkinElmer on the deal, while
Jefferies advised New Mountain Capital.
(Reporting by Leroy Leo in Bengaluru and David Carnevali in New
Editing by Anirban Sen, Philippa Fletcher and Matthew Lewis)