3M adds advanced, surgical wound care products to portfolio with $6.7-billion deal to buy Acelity

3M announced Thursday that it agreed to acquire Acelity under a deal with a total enterprise value of around $6.7 billion, boosting its presence in advanced and surgical wound care.  The purchase of Acelity from a consortium comprised of funds advised by Apax Partners, together with Canada Pension Plan Investment Board and the Public Sector Pension Investment Board, includes the assumption of debt, which stood at $2.4 billion as of the end of 2018.

Commenting on the deal, 3M chief executive Mike Roman said Acelity is "an excellent complement to our health care business," adding that the purchase "bolsters our medical solutions business and supports our growth strategy to offer comprehensive advanced and surgical wound care solutions." According to 3M, Acelity's revenues reached $1.5 billion last year.

The transaction includes Acelity's KCI subsidiaries, which market a range of negative pressure wound therapy, specialty surgical and advanced wound dressing. KCI's branded products include V.A.C. negative pressure wound therapy, which gained expanded FDA 510(K) clearance for the management of closed surgical incisions in 2012, along with Prevena therapy and Promogran Prisma matrix, and the iOn Digital Health platforms.

Following completion of the transaction, which is targeted for the second half of this year, 3M said it expects the acquisition to be $0.35 dilutive to earnings per share in the first 12 months, while excluding accounting adjustments and one-time expenses, the transaction will add $0.25 a share over that period. 3M added that as a result of the deal, it now expects full-year 2019 share repurchases to be in the range of $1 billion to $1.5 billion, down from $2 billion to $4 billion previously.

Credit Suisse analyst John Walsh said "we see Acelity as adding scale to 3M's existing medical solutions business," while Bloomberg Intelligence analyst Joel Levington suggested that "3M's credit ratings may be at risk following [the] agreement."

Acelity was taken private by the Apax Partners consortium in 2011, changing its name from Kinetic in 2014. The company had been looking to list via an initial public offering, with KCI filing a registration statement last month, although sources suggested that 3M made a competitive offer during the process.