Medical device mergers seem to be in the news lately, and Johnson & Johnson's latest acquisition is just another example. J&J recently announced that it plans an acquisition of SterilMed. SterilMed does repair of small medical equipment and also sells reprocessed medical devices.

Post-merger, the plan is for SterilMed to operate as a stand-alone business. It will be part of the Johnson & Johnson subsidiary Ethicon Endo-Surgery Inc. The price for the deal, though not publicly disclosed, is estimated to be worth around $350 million.

Currently, SterilMed employs around 800 people. An Ethicon spokesman said the future focus would be on growth.

Ethicon Endo-Surgery is pleased to get in on a strong-growth segment of the market enjoyed by SterilMed. Currently, Ethicon develops devices involved in gastrointestinal health, general and bariatric surgery, gynecology and surgical oncology.

San Diego mergers and acquisitions attorneys noted from news reports that SterilMed is currently owned by private equity firms. Primus Capital Fund and Great Hill Partners purchased the company for $200 million in 2010. SterilMed's annual revenue at that time was $100 million.

Some observers noted that Johnson & Johnson makes many one-time use medical products. With the acquisition of SterilMed, the company can get in on the reprocessed medical device market. By offering reprocessed devices themselves, J&J can recover some share of the market they formerly left to others. SterilMed sells used devices such as catheters that have been decontaminated, cleaned and tested for reuse.

Source: Star Tribune "J&J medical device unit to buy Maple Grove-based SterilMed" 9/28/2011