3M completes $6.7B deal Acelity

25 October 2019


3M Co. said Friday it has completed its acquisition of San Antonio medical technology company Acelity Inc. in a transaction valued at about $6.7 billion.

Acelity, formerly known as Kinetic Concepts Inc., is focused on advanced wound care and specialty surgical applications marketed under the KCI brand.

The San Antonio company is expected to bolster Minnesota-based 3M’s Medical Solutions business, which supplies medical tapes, dressings, wound closure products, and orthopedic casting materials, among other products.

KCI’s products include V.A.C. (Vacuum Assisted Closure) Therapy, used for wound closures.

The deal represents the combination of two innovative companies focused on delivering comprehensive health care solutions to enable better outcomes for patients, 3M Chairman and CEO Mike Roman said in a statement.

“We are excited to have the tremendous people of Acelity join the 3M team, and are confident in the value that this acquisition will deliver to our customers and our shareholders,” he added. “This addition further accelerates 3M as a leader in advanced wound care, which is a significant and growing market segment.”

The advanced wound care business in an $8 billion market that is growing in the mid-single digits, Roman said in May when 3M announced the Acelity acquisition.

Acelity was owned by a consortium of investment funds advised by London-based private equity firm Apax Partners, the Canada Pension Plan Investment Board and the Public Sector Pension Investment Board. The Apax-led group acquired Acelity in a leveraged buyout of more than $6 billion in 2011.

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The company’s name was subsequently changed to Acelity from Kinetic Concepts, considered the granddaddy of San Antonio medical device companies.

Two weeks before the 3M announcement, a filing with the Securities and Exchange Commission revealed that the newly created KCI Holdings Inc. planned to go public and serve as the holding company for Acelity.

Analysts with Bloomberg Intelligence have described Acelity as a “good fit” for 3M, known as the maker of Post-it notes, Scotch tape and Ace bandages.

Acelity lost about $138 million on almost $1.5 billion in annual revenue last year, though the loss was primarily because of interest expense on debt. It expanded at a 5 percent clip in the first nine months of this year.

Acelity had more than 1,000 local employees earlier this year, when it announced it was cutting about 200 jobs in San Antonio and 260 overall. Its workforce numbered about 4,700 at the end of last year.

An Acelity spokeswoman referred a query to a 3M spokeswoman, who had no comment beyond what was in a news release.

Published by Expressnews.com on October 11, 2019
Image by Shutterstock


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