PerkinElmer divests three business units in $2.45 billion deal

Sign of a PerkinElmer facility in Boston, Massachusetts, US, 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 expands on its life sciences and diagnostics businesses under it. wants to focus. a new name.

PerkinElmer said proceeds from the divestiture will be used to invest in developments in the life sciences and diagnostics areas and to fund future acquisitions. Diagnostics will generate about 60% of the company’s 2022 projected revenue of $3.3 billion, while life sciences will account for the remainder.

According to a source familiar with the matter, the sale marked the conclusion of a strategic review, where other options including spin-off of units were also considered.

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The sale process involved both strategic and private equity, the source said, requesting anonymity because these discussions were confidential.

The price tag of the three units – Applicable, Food and Enterprise Services – implies a valuation of around 14 to 16 times of the 2022 estimated EBITDA (earnings before interest tax depreciation and amortization), the source said.

Shares of PerkinElmer were up more than 6% in afternoon trading on Monday. The transaction is expected to close in the first quarter of 2023, subject to regulatory approval.

PerkinElmer will receive $2.3 billion when the deal closes, while the remaining $150 million will be paid later when New Mountain sells certain assets related to the units it acquired.

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Direct lenders, led by OwlRock Capital, helped finance the deal.

PerkinElmer said the divestiture business will continue to use the PerkinElmer brand, while the life sciences and diagnostics business will be run by existing management under a new name and stock ticker, to be announced later.

“On-surface disinvestment improves the company’s growth profile,” 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 Ganguly, Anirban Sen and Philip Fletcher

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