- Acquisition of Global Market Leader with Strong History of Market Creation, Innovation & Brands
- Provides Entry into the Attractive, Strong Growth Medical Sterilization and Disinfection Market with Runway for Advanced Solutions and International Growth
- Large Global Installed Base with Significant Recurring Revenue of +80%
- Aligned with Fortive’s Strategy to Help Customers Drive Better Safety, Compliance & Productivity
- Complementary to Fortive’s Expertise in Highly Regulated Critical Customer Workflows
- Expected to Achieve 10% ROIC in 4 Years
- Expected to be Accretive to Adjusted Net Earnings in First Full Year Following Acquisition
- Acquisition Expected to Close No Later than Early 2019
Public Company Information:
EVERETT, Wash.--(BUSINESS WIRE)--Fortive Corporation (“Fortive”) (NYSE: FTV) announced today that it has made a binding offer to Ethicon, Inc.*, a subsidiary of Johnson & Johnson, to purchase the Advanced Sterilization Products (“ASP”) business for approximately $2.7 billion in cash. Based on financial measures provided by Johnson & Johnson, ASP generated 2017 revenue of approximately $775 million (unaudited) and adjusted EBITDA margin of approximately 25% (unaudited).
ASP is a leading global provider of innovative sterilization and disinfection solutions and pioneered low-temperature hydrogen peroxide sterilization technology. ASP’s products, which are sold globally, include the STERRAD system for sterilizing instruments and the EVOTECH and ENDOCLENS systems for endoscope reprocessing and cleaning. ASP’s STERRAD systems are complemented with the industry leading VELOCITY rapid-read biological indicator, enabling operating room uptime. STERRAD systems with ALLClear Technology and the VELOCITY Biological Indicator Readers are fully-integrated and network-connected, minimizing the need for manual documentation of vital sterilization information in hospital centralized sterilization services departments. The seamless communication and integration with instrument tracking systems and hospital networks, thereby enhances hospital compliance and improves productivity. EVOTECH and ENDOCLENS systems are sold with the brand-leading CIDEX family of disinfecting solutions for endoscopes and other medical instruments.
James A. Lico, President and Chief Executive Officer of Fortive, stated: “We are excited about today’s announcement which demonstrates the continued evolution of our portfolio towards improving growth, increasing recurring revenue, and expanding positions in attractive markets. With ASP, we expect to acquire a global leader in medical sterilization and disinfection, with a large installed base and very strong brands. This acquisition is entirely consistent with our focus to help customers drive better safety, compliance and efficiency in critical workflows. We have conviction that the addition of ASP to our portfolio will create compelling value for both ASP and Fortive employees, our customers, and shareholders.”
Mr. Lico continued, “We are impressed by the strength of ASP’s innovative product portfolio and its customer relationships. ASP’s culture and commitment to quality and service lends itself to application of the Fortive Business System to drive both accelerated growth and operating synergies. We look forward to welcoming the ASP team to the Fortive family.”
Fortive expects the transaction to be accretive to adjusted net earnings in the first full year. The Company plans to finance the acquisition with available cash and proceeds from issuance of debt and/or equity.
The information and/or consultation processes with the employees’ representative bodies in applicable jurisdictions, including France, Germany, Italy, Switzerland and the European Works Council, will begin immediately. Upon completion of that process, Fortive expects to enter into a definitive purchase and sale agreement with Ethicon for the proposed acquisition.
The proposed transaction, which has been approved by Fortive’s Board of Directors, will also be subject to customary closing conditions, including regulatory approvals.
Goldman Sachs & Co. LLC. served as financial advisor to Fortive and Sidley Austin LLP and WilmerHale served as legal advisors to Fortive.
Fortive will hold a conference call today at 6:00 pm ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of the website, www.fortive.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.
The conference call can be accessed by dialing 844-443-2871 (toll-free domestic) or 213-660-0916 (international); Conference ID: 1199019. A replay of the call will be available until June 20, 2018, via telephone starting approximately two hours after the call ends. Once available, the replay can be accessed at 800-585-8367 (toll-free domestic) or 404-537-3406 (international); Conference ID: 1199019 or visit the “Investors” section of the website under “Events & Presentations.”
Fortive is a diversified industrial growth company comprised of Professional Instrumentation and Industrial Technologies businesses that are recognized leaders in attractive markets. With 2017 revenues of $6.7 billion, Fortive’s well-known brands hold leading positions in field instrumentation, transportation, sensing, product realization, automation and specialty, and franchise distribution. Fortive is headquartered in Everett, Washington and employs a team of more than 26,000 research and development, manufacturing, sales, distribution, service and administrative employees in more than 50 countries around the world. With a culture rooted in continuous improvement, the core of our company’s operating model is the Fortive Business System. For more information please visit: www.fortive.com.
*Advanced Sterilization Products is a division of Ethicon, Inc., a New Jersey corporation.
NON-GAAP FINANCIAL MEASURES OF FORTIVE
This announcement references “return on invested capital (ROIC)” and “adjusted net earnings,” each of which are non-GAAP financial measures of Fortive. Fortive is unable to provide a quantitative reconciliation of the forwarding-looking projections on “ROIC” and “adjusted net earnings” of Fortive to the most directly comparable GAAP measures because the items that would be reconciled are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance. The non-GAAP financial measures of Fortive in this release may be different from similarly-titled non-GAAP measures used by other companies.
UNAUDITED FINANCIAL MEASURES OF ASP
The unaudited financial measures of ASP for fiscal year 2017 included in this announcement are unaudited and subject to material revisions upon completion of the audit processes of ASP’s carve-out financial statements for fiscal year 2017.
Statements in this release that are not strictly historical, including statements regarding the proposed acquisition, the anticipated timing and terms of the acquisition, future financial impact or results of the acquisition, the anticipated prospects of ASP or the industry following the acquisition, future opportunities for Fortive or ASP following the acquisition, and any other statements regarding events or developments that Fortive expects or anticipates will or may occur in the future, are “forward-looking” statements within the meaning of the federal securities laws. There are a number of important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These risks and uncertainties include, among other things, the ability of the parties to satisfy the conditions to the acquisition on a timely basis, the parties’ ability to complete the acquisition on the anticipated terms and schedule, including the ability to obtain regulatory approvals, deterioration of or instability in the economy, international trade policies, and the financial markets, contractions or lower growth rates and cyclicality of markets Fortive or ASP serves, competition, changes in industry standards and governmental regulations, Fortive’s ability to successfully integrate and realize the anticipated value of ASP’s operations, the ability to realize anticipated growth, synergies and cost savings, and ASPs performance and maintenance of important business relationships pending closing of the acquisition. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended March 30, 2018. These forward-looking statements speak only as of the date of this release, and Fortive does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
Lisa Curran, 425-446-5000
Vice President, Investor Relations
6920 Seaway Boulevard
Everett, WA 98203