According to Jyoti Ranjan Padhi, Analyst at GlobalData, “With multiple high value private equity transactions and super large mergers and acquisitions (M&As), the last year had been startlingly dynamic for the global medical equipment industry. Driven by declining asset prices, the industry will continue to see heightened activity on the M&A front. The future is heading for an M&A landscape which will be characterized by strategic intra-industry buyouts and asset takeovers.”
Over 1,250 deals were signed in the global medical equipment industry in 2008, an increase of 25% over 2007. However, the total deal value witnessed a major decline with over $62 billion in 2008 as against $109 billion in 2007, a decline of 42%. The decline in deal value can primarily be attributed to the ongoing credit crunch that impacted the last quarter of the year. Over 330 deals worth over $5 billion were signed in the last quarter of 2008 as against nearly 360 deals worth over $12 billion in the third quarter of 2008.
Essilor International and GE Healthcare were the top deal makers in 2008 participating in 17 deals each in the medical equipment industry in 2008. Piper Jaffray & Co. and Cooley Godward Kronish LLP topped the list of financial and legal advisors respectively by advising on the maximum number of deals in the medical equipment industry in 2008.
M&As accounted for nearly 30% of the total number of medical equipment deals in 2008. Over 400 M&A deals were reported in 2008 compared to over 300 such deals in 2007. However, deal value decreased from nearly $62 billion in 2007 to $36 billion in 2008, mainly due to the financial crisis decreasing the valuation of the target companies. M&As increased particularly in the second half of 2008, due to a stagnant IPO market forcing companies to look for acquirers. Novartis’ acquisition of a minority stake in Alcon for $10.4 billion stood as the top M&A deal in 2008.
Venture capital investments in medical equipment remained strong despite the financial crisis and volatility in the market. Start-up companies in the In-Vitro Diagnostics (IVD) market gained the highest number of investments from venture capitalists in 2008. Overall, venture investments in the medical equipment industry rose marginally to reach $4.4 billion in 2008 compared to $4 billion in 2007. Versant Venture Management LLC, a VC firm investing mostly in early stage companies, topped the list by investing in 19 medical equipment deals in 2008
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The report also provides detailed comparative data on the number of deals and their value in the last six months subdivided by sector and geography.
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