Masimo Corp (NASDAQ:MASI), a medical technology company, is in active discussions to sell a majority stake in its consumer business, with a potential deal valued between $850 million to $950 million.
This information was disclosed in a recent SEC filing dated July 8, 2024, which also stated that the discussions are ongoing and subject to further negotiation, due diligence, and requisite approvals.
The potential joint venture partner, which has been in talks with Masimo since March 2024, has confirmed its interest in acquiring the consumer audio and health businesses.
The term sheet suggests a cash payment to Masimo and a contribution to the joint venture. A short-term exclusivity period extension through mid-August 2024 has been proposed to allow one or two additional companies to conduct due diligence.
Masimo's Board continues to evaluate the structure for separating the consumer business, including a potential public company spin-off. The terms of the potential joint venture, including the scope of intellectual property rights and the retention of litigation with Apple (NASDAQ:AAPL), remain under negotiation. Masimo has proposed to license certain intellectual property rights to the joint venture for consumer use, excluding healthcare applications.
The SEC filing emphasizes that the deal terms, including the purchase price, are not final and may change materially. Masimo, advised by Morgan Stanley and outside counsel, is aiming for a higher purchase price than the current offer.
The information in this article is based on a press release statement and is intended to provide factual news without endorsement or speculation. The outcome of these negotiations could significantly impact Masimo's business structure and financial future.
In other recent news, Masimo Corporation has reported significant developments. The company has disclosed a conditional resignation from its Chief Operating Officer, Bilal Muhsin, contingent upon the removal of Joe Kiani as Chairman of the Board and Chief Executive Officer. This move comes amid ongoing discussions about a potential joint venture or acquisition involving a majority of Masimo's consumer business.
In financial updates, the company reported strong Q1 2024 earnings, with healthcare revenues reaching $340 million. This positive performance has led to Masimo raising its guidance for healthcare revenues and non-GAAP EPS. Furthermore, Piper Sandler has upgraded the company's stock from Neutral to Overweight, citing improvements in Masimo's core healthcare business.
Amid these developments, Masimo is urging shareholders to vote against a takeover bid by Politan, advocating for the reelection of its founder, Joe Kiani, and director nominee Christopher Chavez.
The company is also evaluating strategic options for its consumer business, including a potential spin-off or sale. These are the recent developments within Masimo Corporation.
InvestingPro Insights
As Masimo Corp (NASDAQ:MASI) negotiates the sale of a significant portion of its consumer business, investors may find it beneficial to consider the company's financial health and market performance. According to InvestingPro data, Masimo has a market capitalization of $6.09 billion, and despite a challenging revenue growth trend over the last twelve months as of Q1 2024, with a decrease of nearly 13.96%, the company maintains a substantial gross profit margin of 48.61%. Additionally, Masimo's liquid assets surpass its short-term obligations, indicating a strong liquidity position that could support its strategic decisions during this pivotal time.
InvestingPro Tips suggest that while analysts have revised their earnings expectations downwards for the upcoming period, they predict Masimo will be profitable this year. Moreover, the company has been profitable over the last twelve months and has delivered a high return over the last decade. However, investors should be aware that Masimo is currently trading at high earnings, EBIT, and EBITDA valuation multiples, with a P/E ratio of 76.45 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 69.41.
For those considering an investment in Masimo, or for current shareholders looking to deepen their analysis, InvestingPro offers additional insights and tips. There are 9 more InvestingPro Tips available for Masimo, which could be particularly valuable during this period of potential business restructuring. To access these tips and enhance your investment strategy, use the exclusive coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/MASI.
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