Tuesday, October 25, 2022
Medtronic plc, a global leader in healthcare technology, today announced its intention to pursue a separation of the company's combined Patient Monitoring and Respiratory Interventions businesses ("NewCo"), which are part of the company's Medical Surgical Portfolio.
"We are executing on our portfolio management strategy, taking action to create value for Medtronic and our shareholders. This separation will allow Medtronic to focus our company and our capital on opportunities better aligned with our long-term strategies to accelerate innovation-driven growth, and will position NewCo to unlock value. Independently, NewCo will be a leading connected care company with a compelling leadership position, attractive margins, and potential for growth acceleration with increased investment and dedicated capital allocation," said Geoff Martha, chairman and CEO of Medtronic. "Looking ahead, we remain focused on active portfolio management with an ongoing process of evaluating potential additions and subtractions to further accelerate Medtronic's growth over the long-term."
Medtronic – The leading global healthcare technology company
The decision to pursue a separation represents an important next step in ongoing portfolio assessment by Medtronic that demonstrates its commitment to creating value for all of its stakeholders. The separation will enable greater investment focus in the areas of highest strategic priority across the company, and will facilitate the execution of its leadership strategy in attractive medtech markets that leverage the company's strengths. Following the separation of NewCo, Medtronic will have:
NewCo is uniquely positioned to offer the full suite of connected patient monitoring and respiratory care solutions
NewCo is expected to be a premier partner for connected care solutions with best-in-class brands and leading positions in patient monitoring and critical care:
Patient Monitoring and Respiratory Interventions reside in the Respiratory, Gastrointestinal & Renal division within the Medtronic Medical Surgical Portfolio. In fiscal year 2022, the combined business generated global revenue of approximately $2.2 billion. The combined business has a constant currency revenue growth profile and gross margin profile slightly below overall Medtronic and an operating margin profile slightly higher than overall Medtronic. The combined business has a global commercial footprint and a team of more than 8,000 employees worldwide.
NewCo is expected to be ideally positioned to deliver expanded value creation through:
Medtronic plans to redeploy any net proceeds consistent with its stated capital allocation priorities. Medtronic does not expect this separation to impact its dividend policy.
Medtronic expects the separation to be completed in the next 12 to 18 months subject to the satisfaction of closing conditions, including obtaining final approval from the Medtronic Board of Directors, receipt of tax opinions and receipt of other regulatory approvals. Medtronic plans to provide additional details on the potential transaction in due course. There can be no assurance regarding the ultimate timing or structure of the potential separation or that a separation will be completed at all, or if completed, what form the separation would take.
Medtronic's financial advisors on the transaction are Perella Weinberg Partners LP and Goldman Sachs & Co. LLC. Its legal advisors on the transaction are Wachtell, Lipton, Rosen & Katz; Skadden, Arps, Slate, Meagher & Flom LLP; and Baker McKenzie.