NEW YORK Bristol-Myers Squibb Co (BMY.N) said on Friday it has agreed to sell its ConvaTec wound care and ostomy care business to Nordic Capital Fund VII and Avista Capital Partners for $4.1 billion as part of its strategy to unload non-core businesses.
ConvaTec has been a well-performing unit with global sales rising 14 percent to $290 million in the first quarter.
"It looks to me like a good price," Deutsche Bank analyst Barbara Ryan said. "The company is trying to focus on its core research and development pharmaceutical business, and being able to sell these assets at attractive prices is all part of that."
Bristol-Myers has said its focus going forward would be on pharmaceuticals and developing biotechnology medicines, which have much higher profit margins than businesses such as wound care.
It sold its medical imaging business to Avista in January for $525 million and plans by year end to file an initial public offering to sell about 10 percent, but no more than 20 percent, of its Mead Johnson nutritional business.
In a research note, Lehman Brothers analyst Tony Butler called the Mead Johnson IPO decision a positive one "as it will continue to provide diversity, cash flow and future growth" as the company deals with patent expiration on important products in coming years.
Bristol-Myers had indicated during a conference call last month that it was shopping ConvaTec and had found significant interest at attractive valuation levels. The deal with the private equity groups was the culmination of that effort.
"These decisions support our next-generation BioPharma strategy," Bristol-Myers Chief Executive James Cornelius said in a statement. "We will now have additional financial resources to expedite that strategy."
The company said Dave Johnson would remain CEO of ConvaTec when it changes hands to become a stand-alone company.
The deal is expected to close in the third quarter of this year, subject to customary regulatory approvals and delivery of ConvaTec's audited 2007 financial statements, the companies said.
(Reporting by Bill Berkrot and Ransdell Pierson, Editing by Toni Reinhold)