FTC sues to block medical device coatings deal
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The Federal Trade Commission under President Trump is making its first move to challenge private equity in health care, by suing to block the $627 million acquisition of a maker of specialized coatings for catheters and other medical devices.
Why it matters: It's the first such FTC action around M&A since Trump was sworn in and could signal continued regulatory scrutiny as private equity buys more health care firms.
Driving the news: FTC commissioners voted 4-0 to seek a temporary restraining order and a preliminary injunction to halt GTCR's acquisition of Surmodics, alleging that the deal would combine the two largest makers of specialized coatings and is anticompetitive.
- The combined company would control more than 50% of the market for hydrophilic coatings, which are used on catheters, guidewires and other devices and help doctors maneuver within tight confines like blood vessels in the brain without damaging surrounding tissue.
- Surmodics is the largest provider of outsourced coatings, and GTCR already owns a majority stake in Biocoat, the No. 2 provider, per the FTC.
What they're saying: The agency said the companies are locked in fierce competition and often target the same device-makers.
- "This type of consolidation playbook is prevalent and is particularly concerning when it is executed in health care markets, where not just money but lives are on the line," commissioners Rebecca Kelly Slaughter and Alvaro Bedoya said in a joint statement on Friday.
The other side: Surmodics said it disagrees with the FTC and remains committed to completing the merger, which was announced and approved by shareholders last year.
- "We have worked constructively with the FTC over the last several months to secure regulatory approval for the merger and are disappointed by its decision to initiate litigation, as the merger is pro-competitive," the company said.
The FTC under the Biden administration put a heightened focus on private equity and health care markets, including scrutiny of "rollups," in which PE firms can consolidate a market through a series of smaller transactions.
