Abbott Laboratories could be a potential bidder for the blood-testing division of Johnson & Johnson, which is looking to shed the unit in a deal that could be worth $5 billion, according to a published reports.
New Brunswick, N.J.-based J&J is talking to health care companies and private equity firms that are potential buyers for its Ortho Clinical Diagnostics unit, which makes tests that identify blood type, screen for viruses like HIV and hepatitis C and help diagnose a heart attacks, Reuters reports.
JPMorgan Chase & Co. is gearing up to market the unit, which has EBITDA — earnings before interest and other charges — of between $400 million and $500 million, the report says.
The J&J unit could be a good fit for Abbott's diagnostic division, which had $2.2 billion in net sales for the six months ended June 30, or about 20 percent of its total net sales of $10.8 billion during the period, according to recent filing with the U.S. Securities and Exchange Commission.
A multibillion acquisition would boost North Chicago-based Abbott's growth.
During a conference call to discuss Abbott's second-quarters earnings, Chairman and CEO Miles White declined to disclose whether he was looking for bigger deals.
“I don't think there's a particularly robust, shall we say, opportunity set out there in a number of fields today,” he said, according to a transcript of the July 17 call.
“If the valuations are too high or we can't make a strategic argument to you of why it's worth whatever it may be, then we don't make the move,” he said. “And that doesn't mean we're only going to do little deals.”
An Abbott spokeswoman did not immediately return a call to comment.
The global market for in-vitro, or test tube, diagnostics totals $46 billion a year and is growing up to 7 percent annually, according to the Wall Street Journal, citing data from Frost & Sullivan, a market research and consulting firm.
But J&J is a relatively small player in the market, which is dominated by Swiss company Roche Holding AG, with a 20 percent share by revenue, followed by German company Siemens AG and North Chicago-based Abbott, the Journal noted.
But the field of potential buyers could be crowded. Other possible bidders are General Electric and Danaher Corp., Reuters says.
The market effort by J&J is part of a broader plan by the company, with 2012 sales of $67 billion, to shed slow-growing products and units.
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