Tokyo-based medtech giant Olympus Corporation’s [TYO:7733] microscope business is currently in a sale process, sources familiar with the situation said.
Information memoranda have already been delivered to potential buyers, they noted, adding the business generates EBITDA of about JPY 20bn (USD 160m).
The first-round bids will be collected after the Golden Week holidays, they noted. Japan’s Golden Week holidays end in early May.
Goldman Sachs is the sellside advisor, as reported by this news service in December 2021.
The deal could attract global private equity firms, such as KKR [NYSE:KKR], Bain Capital, Blackstone [NYSE:BX] and EQT [STO:EQT], according to the sources.
Olympus’ microscope business has a solid customer base with many loyal academic users, meaning it generates stable cash flows, according to an industry banker. This typically draws interest among private equity bidders, the banker noted.
Canon [TYO:7751], could also be interested in the deal, one of the sources said.
Shimadzu [TYO:7701] may also be among potential bidders as it manufactures analytical instruments, according to the industry banker.
Meanwhile, the sources believe the deal value could reach more than 10x EBITDA.
However, one of the sources warned that debt providers may take a cautious stance about extending high financial leverage after KKR-backed automobile component maker Marelli filed an application in March for a business turnaround under the Alternative Dispute Resolution (ADR) process.
Olympus announced on 17 December 2021 that it will spin off its Scientific Solutions (microscope) business into a wholly owned subsidiary named Evident. The deal was completed on 1 April 2022, according to a separate statement.
Evident is expected to post sales of JPY 114bn and operating profit of JPY 15.5bn for the year ended March 2022, as announced.
The Scientific Solutions Business develops and manufactures an array of biological and digital microscopes for the life sciences and industrial sectors. The unit’s products also include nondestructive testing technology, X-ray analyzers, and incubation monitoring systems, among others.
Olympus, which has a market capitalization of about JPY 3.1trn (USD 24.8bn), announced in June 2021 that it will start considering transferring its Scientific Solutions Business into a wholly owned subsidiary. The company issued an update in November noting that it was “taking all options into consideration including a possible subsequent business transfer” with regards to the unit.
About 80%-85% of the Scientific Solutions Business revenue is from overseas, so potential buyers are likely to be global private equity firms and global strategics, according to the December article from this news service.
Olympus has undergone a significant transformation over the past several years, and its medical business (gastrointestinal endoscope, surgical endoscope, medical service, GI-endotherapy, urology, respiratory, and other therapeutic areas) accounted for 85% of its overall business, according to a company presentation dated 4 Feb. The Scientific Solutions Business accounted for 13%.
The company announced last December that it will put a greater focus on gastrointestinal, urological, and respiratory care solutions for chronic diseases. It will also focus more on investment in next-generation technologies.
It has a partnership with San Francisco-based activist investor ValueAct Capital, and according to a local media report published in November 2021, ValueAct holds a stake worth about USD 1.3bn in Olympus.
An Olympus spokesperson claimed no knowledge of the situation.
Shares in Olympus closed at JPY 2,406 today (14 April).
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