- Buyout marks the largest medical devices deal since 2006
- Private equity firms capitalize on undervalued healthcare assets
- Improving credit markets enabling larger buyouts
Oct 21 (Reuters) – Private equity firms Blackstone (BX.N) and TPG (TPG.O) on Tuesday said they will buy medical diagnostics firm Hologic (HOLX.O) for $18.3 billion including debt, in the largest medical devices deal in almost two decades.
The buyout shows how the split in market valuations in the United States – companies in AI are highly valued, while sectors like healthcare, industrials and consumer products are undervalued – is creating opportunities for private equity firms to buy large publicly traded companies outright.
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It also illustrates how easier access to financing is helping private equity firms do bigger deals. If approved by regulators, Hologic – which specializes in women’s health diagnostics, including breast and cervical cancer screening – will be delisted from the Nasdaq stock market.
Blackstone and TPG agreed to pay $76 per share in cash for all outstanding Hologic shares, implying a premium of nearly 6% to the stock’s last closing price.
Hologic shares were up about 3% in midday trading. They have gained about 13% since Blackstone and TPG were said last month to have revived interest in the company after intermittent talks between the parties over the past year.
The Hologic deal marks the largest acquisition of a medical device company since Boston Scientific bought Guidant Corp for $27 billion in 2006.
LOWER BORROWING COSTS ENABLE LARGE BUYOUTS
Over the past year, borrowing costs have started to come down and lenders have become more willing to fund large transactions, making it possible for private equity firms to take multibillion-dollar companies private.
In September, a consortium of investors agreed tp take Electronic Arts Inc (EA.O) private in a $55 billion leveraged buyout, the largest of its kind. Last week, investors led by BlackRock Inc’s (BLK.N) Global Infrastructure Partners struck a $40 billion agreement to acquire Aligned Data Centers.In addition to the equity commitments from Blackstone and TPG for Hologic, five banks — Citigroup Inc (C.N), Bank of America Corp (BAC.N), Barclays PLC (BARC.L), Royal Bank of Canada (RY.TO), Sumitomo Mitsui Banking Corp — committed to provide debt financing.
The firms plan to accelerate research, pursue acquisitions and develop products without the pressure of quarterly earnings, people close to the transaction said.
Hologic’s products are described as highly innovative, hard to replicate, and preferred by clinicians and patients, which gives it strong market share and pricing power.
Shareholders will also receive a non-tradable contingent value right of up to $3 per share, payable if Hologic meets revenue targets in its Breast Health business in fiscal years 2026 and 2027, bringing the total potential payout to $79 per share.
The offer seems “fair for all parties,” BTIG analyst Ryan Zimmerman said on Tuesday.
“We view this as generally positive for the (medtech) sector as it adds to the pool of acquirers but also will result in stronger businesses if/when they re-emerge as public assets,” Zimmerman said.
The deal, expected to close in the first half of 2026, includes significant minority investments from a unit of the Abu Dhabi Investment Authority and an affiliate of GIC, Hologic said.
Goldman Sachs advised Hologic, while Citi is advising the Blackstone-TPG consortium. Legal counsel includes Wachtell, Lipton, Rosen & Katz for Hologic, and Kirkland & Ellis LLP and Ropes & Gray for the buyers.
Reporting by Sabrina Valle in New York and Padmanabhan Ananthan, Sneha S K and Mariam Sunny in Bengaluru; Editing by Shilpi Majumdar, Sriraj Kalluvila and Leslie Adler
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