KKR & Co. L.P. (KKR): This Healthcare Unit Is Attracting Attention From Big-Name Bidders

Potential synergies for bidders

Out of all of the potential bidders, Toshiba has the most to gain from a potential buyout of Panasonic’s healthcare division. The company manages a small medical imaging division and makes a number of other products that can be put to use in the medical field. As such, it could well parlay this acquisition into a major pickup for its burgeoning healthcare division.

Of course, several of the buyout-specialist firms that have expressed interest in bidding are also significant players in the healthcare space. If one of these companies can combine Panasonic’s assets with their in-house medical operations, it could derive tremendous financial and operational benefit.

Long-term benefits for Panasonic and others

Panasonic has publicly announced its intention to generate more than 200 billion yen in sustainable cash flow over the medium term. Although the sale of this division cannot help the company achieve this goal in one fell swoop, it will certainly create cost savings that provide Panasonic with more leeway to turn around its struggling electronics business.

With the company in the early stages of a major restructuring plan, offloading the peripheral healthcare business is likely to be a key first step in Panasonic’s inevitable “right-sizing.” It should be noted that the firm is also mulling the sale of its separate logistics business.

How to play it?

This deal offers a range of potential benefits for Panasonic as well as the healthcare division’s eventual buyer. Since the likely buyer will probably maintain a significant portfolio of healthcare-related assets, the sale is likely to create synergies that could prove profitable for rank-and-file investors. For Panasonic, the deal is likely to spur the turnaround of its flailing core businesses. Unlike many asset sales, this situation could provide attractive opportunities for long investors on both sides of the deal. Traders and long-term investors would do well to take note.

The article This Healthcare Unit Is Attracting Attention From Big-Name Bidders originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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