Monday, September 30, 2013

Carlyle to Bid on J&J Diagnostic Unit

Reuters reported:

Some of the world's largest private equity firms have made preliminary offers for Johnson & Johnson's Ortho Clinical Diagnostics unit, which makes blood screening equipment and laboratory blood tests and could fetch around $5 billion, several people familiar with the matter said on Monday.

Blackstone Group LP, KKR & Co LP, Bain Capital LLC, Carlyle Group LP and BC Partners Ltd are among the buyout firms that submitted first-round bids last week and are waiting to hear back this week on who made the shortlist, the sources said.

Recall how KKR's purchase of HCA added tens of billions in new health care costs.  Private equity underwriters are not the balm that heals unaffordable healthcare.  Their aim is to ride discontinuity, enabling them to buy health care assets on the cheap, bleed cash from affiliates via management fees and special distributions, then flip the company for a multiple of the original price.  The flip can be anywhere from 2 to 10 times their original equity.

As for quality I'll pass on any Blackstone, Bain or Carlyle Group blood test or transfusion.  Think Chinese infant formula or toxic kids' jewelry.