(Reuters) – ConvaTec’s owners have appointed Morgan Stanley and Goldman Sachs to explore a sale of the medical device maker which could be worth up to $10 billion, sources familiar with the matter said.
Private equity firms Avista Capital Partners and Nordic Capital are preparing the groundwork for a possible sale or initial public offering (IPO) in 2015 for the Luxembourg-based company, said the sources who spoke on condition of anonymity because the process is private.
Mergers and acquisitions in the healthcare space have hit a record pace so far this year, in part driven by U.S. companies seeking to redomicile in countries that have a lower corporate tax rate, in a practice known as inversion.
Kimberley-Clark (KMB.N: Quote, Profile, Research, Stock Buzz) and 3M (MMM.N: Quote, Profile,Research, Stock Buzz) are considered likely bidders for ConvaTec, said the sources, adding that the U.S. firms’ interest was not motivated by tax inversion issues.
ConvaTec, Nordic Capital, 3M, Goldman Sachs and Morgan Stanley declined to comment. Kimberley Clark and Avista Capital did not immediately respond to requests for comment.
Reuters reported in August that some U.S. companies including diversified manufacturer 3M and medical equipment makers CareFusion Corp (CFN.N: Quote, Profile, Research, Stock Buzz) and C.R. Bard Inc (BCR.N: Quote, Profile, Research, Stock Buzz) were potentially exploring a deal, but that ConvaTec wanted to boost its value further before launching an auction or IPO.
CareFusion has since been swallowed by medical equipment supplier Becton Dickinson & Co for $12.2 billion, taking them out of the field.
Also, in recent weeks equity markets have stumbled and the market for IPOs has stalled.
Avista Capital Partners and Nordic Capital acquired ConvaTec from Bristol-Myers Squibb Co in 2011 for $4.1 billion. 3M and Kimberley-Clark were among the contenders for ConvaTec at the time, according to people familiar with the matter.
ConvaTec reported earnings before interest, tax, depreciation and amortization (EBITDA) of $502.5 million in 2013, up 15 percent year-on-year. It is hoping to exceed $600 million in EBITDA this year, sources have said.
The company makes wound care and ostomy care products at 11 manufacturing sites in eight countries, and sells them in more than 100 countries.