The only way is Essex for S&N spin-off
5 January 2012 12:45am
SMITH & Nephew has sought to bounce back from a profits slump by spinning off its biologics business in a $258m (£165m) deal.
Europe’s largest artificial hip and knee maker said it will form a US-based joint venture which will be majority owned by healthcare private equity firm Essex Woodlands.
Yesterday S&N said it would receive $98m cash, which will be used to pay down debt, and a $160m five-year note from the joint venture. The JV will be known as Bioventus and owned 51 per cent by Essex Woodlands.
The deal comes two months after S&N reported a nine per cent drop in quarterly trading profit as people put off elective procedures over economic fears, and boss Olivier Bohuon said it needed to adapt faster to market challenges. Yesterday Bohuon said the deal boosted efficiency and helped it to realise value for re-investment.
“We have given our existing biologics business the resources to address longer-term development projects.”
ADVISERS: ONDRA PARTNERS
A host of advisers worked on the complex deal, which will see Smith & Nephew transfer the majority of its US biologics team and clinical therapies business to Bioventus, in which it will have a 49 per cent stake.
S&N was advised by Ondra Partners. Partner Michael Baldock led the team and worked alongside Michiel Broker, Larry Codraro and Jordon Giancoli. Legal advice came from Davis Polk & Wardwell, a global law firm whose roots go back to 1849 in Manhattan.
Reed Smith, led by partner Patrick Rice, provided legal advice to Essex Woodlands. New York-based Rice is a former general counsel of the $6.5bn Goldman Sachs Infrastructure Fund.
Financial advice was provided by Essex’s internal team, led by New York partner R. Scott Barry.
Essex Woodlands is a global venture capital and growth equity firm with $2.5bn under management.
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