PerkinElmer divests three business units in $2.45 bln deal – Reuters.com

A sign marks a PerkinElmer facility in Boston, Massachusetts, U.S., May 15, 2020. REUTERS/Brian Snyder/File Photo

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Aug 1 (Reuters) – PerkinElmer Inc (PKI.N) 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 new name.

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 company’s 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 spin-off of the units, were also considered, according to a source familiar with the matter.

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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 its 2022 estimated EBITDA (earnings before interest taxes depreciation and amortization), the source said.

Shares of PerkinElmer were up over 6% in midday trading on Monday. The transaction is expected to close in the first quarter of 2023, subject to regulatory approvals.

PerkinElmer will get $2.3 billion when the deal closes, while the remaining $150 million will be paid to them later when New Mountain sells some of the assets related to the units it acquires.

Direct lenders led by Owl Rock Capital helped finance the deal.

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 note.

Goldman Sachs advised PerkinElmer on the deal, while Jefferies advised New Mountain Capital.

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Reporting by Leroy Leo in Bengaluru and David Carnevali in New York; Editing by Shinjini Ganguli, Anirban Sen and Philippa Fletcher

Our Standards: The Thomson Reuters Trust Principles.

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