Amid a revenue slump, Avantor sells its clinical services business for $650 million
To strengthen its balance sheet, Avantor has signed a definitive agreement to sell its clinical services business to US private equity firm Audax Private Equity for approximately $650 million.
According to Avantor, the transaction is expected to generate approximately $475 million in cash after taxes. The sale is expected to save the company approximately $50 million in capitalized leases. The deal is expected to close in the fourth quarter of this year.
Avantor plans to use the proceeds from the deal to pay down debt, reduce interest expenses and strengthen the company’s balance sheet. The clinical services business is part of Avantor’s laboratory solutions segment and includes kitting, biorepository and related equipment and supplies. According to the company, the clinical services segment employs approximately 800 people and is expected to generate revenue of $200 million this year.
“(The divestiture) is an important step for Avantor as we continue to optimize our portfolio in line with our new operating model,” said Michael Stubblefield, Avantor’s President and CEO.
“The divestiture allows us to focus more on strategic growth opportunities in our laboratory and manufacturing businesses while strengthening our balance sheet. We are pleased to have found a new owner in Audax that recognizes the value of this business and is ideally positioned to invest in and grow the platform for the benefit of all stakeholders.”
Avantor has seen a decline in product sales in recent months. In 2023, the company reported a 7.3% decline in net sales compared to 2022. The downward trend continues: Avantor reported a 2.4% decline in sales in the second quarter of this year compared to the same quarter in 2023. The company also reported an adjusted net leverage ratio of 3.9x as of June 30, 2024.
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By GlobalData
Another medical device company that sold part of its business to a private equity firm this year was Johnson Matthey. The UK-based company sold its medical device components division to European private equity firm Montagu in an all-cash transaction valued at £550 million ($700 million).
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