In attempts to slim down and focus more closely on medical or life sciences offerings, both Olympus and PerkinElmer have recently sold off portions of their businesses to private equity firms. On August 29, Tokyo-based Olympus, a manufacturer of optical products, announced the sale of its microscope unit Evident to Bain Capital for $3.08 billion. The deal follows scientific products and services corporation PerkinElmer’s August 1 announcement it had entered an agreement with New Mountain Capital to divest its Applied, Food, and Enterprise Services businesses for up to $2.45 billion in cash.
Proceeds from the deals will allow both companies to pour resources into refined focuses: life sciences and diagnostics offerings for PerkinElmer, and medical technologies for Olympus. Selling to private equity will hopefully give the offloaded businesses the opportunity to continue growing, while from the private equity buyers’ perspectives, the stable and positive cash flow expected by the divested businesses make them attractive acquisitions.
PerkinElmer has been moving toward focusing on life sciences in recent years, acquiring both antibody and reagents powerhouse BioLegend and diagnostics company Oxford Immunotec in 2021. A source close to the recent sale told Reuters that other options were considered, including spinning off the units or selling to strategic buyers, but the carve out to New Mountain won out as it will both allow PerkinElmer to invest in its existing life sciences businesses and fund future acquisitions within that scope.
The deal completes PerkinElmer’s transformation into a pure-play Life Sciences and Diagnostics company that will adopt a new name and stock ticker at a later date, the company said in a press release. These remaining units are expected to make $3.3 billion in sales this year, around 60% from diagnostics and around 40% from life sciences, while the divested businesses, which include PerkinElmer’s portfolio of chromatography and mass spectrometry instruments, are expected to bring in $1.3 billion in 2022. Overall, the divestiture of the three PerkinElmer businesses improves the growth profile of the company, experts tell Reuters.
Olympus, too, has been reorganizing its portfolio in the last few years, and though its scientific businesses remain profitable, their growth has stalled. In mid-2020, the company sold off its longstanding camera business, and in 2021, got rid of subsidiaries focused on IT solutions and regenerative medicine development. In 2020, the company told Evaluate Vantage it was focusing on acquiring innovative therapeutic technologies and made good on the promise later that year when it purchased Verna Medical Technologies, an interventional pulmonology device firm.
The divestment of Evident could enable Olympus to continue making similar acquisitions. After selling Evident, Olympus will operate as a global medical technology company and specifically allocate resources to its endoscopic and therapeutic solutions sections, the company said in a release announcing the deal. The divested microscopy businesses contributed to less than 10% of the company’s revenues, Chemical & Engineering News reports, and have little customer overlap with its medical device business. As such, divesting not only allows Olympus to focus on the medical market but also simplify its operations.