This month, major medical devices manufacturer Panasonic Healthcare Holdings closed its acquisition of Bayer Diabetes Care. PHC has for many years provided Bayer with medical equipment as an OEM and through this acquisition has established a unified manufacturing and sales framework. The deal also gives PHC access to global sales channels and could lead to expansion beyond blood glucose monitoring systems. In less than two years since its acquisition by a U.S. investment fund, Panasonic Healthcare has embarked on a new growth phase.

The team that led Bayer's diabetes equipment business expressed their appreciation of Panasonic Healthcare President & CEO Hidehito Kotani at the end of 2015, saying, 'We're delighted that we have finally come together.' Mr. Kotani commented that the deal 'Feels like getting married to a long-term partner. The integration will be smooth.'

Through the carve-out, PHC is acquiring Bayer's diabetes equipment business unit worldwide for approximately 132 billion yen. Bayer's unit is number 3 globally with a 15% share of the market. The addition of PHC's share brings this to 20%. Mr. Kotani commented that his goal is the 'top share.'

Bayer launched its diabetes equipment business in 1969 and began selling PHC's blood glucose meters in 1991. The majority of blood glucose meters sold by the company in about 125 countries are manufactured by PHC.

The central theme of the acquisition is 'integration of manufacture and sales.' According to Mr. Kotani, 'Until now, our ability to hear customer feedback directly and leverage this in the development of new products has been insufficient. By integrating development, manufacturing, and sales we can increase the speed of product development and get our products to patients more quickly.

Access to Bayer's sales channels is significant. Through the acquisition, Ascensia Diabetes comes under the PHC umbrella, bringing with it 35 local affiliates in 34 countries, including the U.S., Germany, and France.

Preparation is now underway to establish offices in Saudi Arabia, The UAE, Kuwait, and Egypt. Mr. Kotani said that he hopes to take advantage of these sales channels to expand sales to diagnostic equipment beyond diabetes.

The presence of U.S. investment fund KKR, which owns 80% of PHC, was a major factor in this large acquisition where the price exceeded PHC's own annual sales.

Panasonic sold PHC to KKR in March 2014 as part of its structural reforms to address deteriorating business performance. Reflecting on the Bayer deal, Mr. Kotani said that 'Without KKR's global experience in corporate carve outs, this acquisition from Bayer wouldn't have happened.'

The deal gives PHC annual sales in the region of 200 billion yen and places it among the top medical equipment manufacturers in Japan. With plans to relist in the future, observers will now want to know how the deal will bring concrete synergies for PHC.

KKR & Co. LP issued this content on 29 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 02 February 2016 17:32:04 UTC

Original Document: http://ir.kkr.com/kkr_ir/kkr_releasedetail.cfm?ReleaseID=952924