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Fortive Completes Buyout of Johnson & Johnson's ASP Unit

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Fortive Corporation (FTV - Free Report) recently announced that it has completed the acquisition of Advanced Sterilization Products (“ASP”) from Johnson & Johnson’s (JNJ) subsidiary, Ethicon, Inc. for approximately $2.7 billion.

ASP offers infection prevention solutions that are used in disinfection and sterilization of reusable surgical instruments. These solutions, which are based on low-temperature hydrogen peroxide sterilization technology, help in protecting patients from hospital infections. Last year, it generated $800 million of revenues.

With this latest move, the company will be able to foray into the rapidly growing infection control market. Per data from Markets and Markets, the said market is expected to witness a CAGR of 6.5% between 2017 and 2022, and reach 21.06 billion by 2022 from $15.35 billion in 2017.

Expanding Product Portfolio

The ASP deal will help the company to expand its product portfolio. The products of ASP include STERRAD, EVOTECH and ENDOCLENS, which have gained popularity in the global market.

We believe that the company is well poised to gain from this acquisition and the market in which ASP operates, along with its own products namely Gilbarco Veeder-Root, Fluke, Sensing technologies, Tektronix, Qualitrol and Jacobs Vehicle Systems. 

Notably, all these products, which performed well in the last reported quarter, are expected to sustain the performance of Fortive across the geographical regions served by the company.

Bottom Line

Strategic acquisitions and other deals have significantly contributed to Fortive’s growth trajectory via expanding its product portfolio. The company expects the buyout of ASP to be accretive to future earnings, similar to previous acquisitions.

Last year, the company closed the Gordian and Accruent buyouts. In addition, it closed the divestiture of automation and specialty businesses to Altra.

Additionally, the company’s acquisitions of Orpak, Industrial Scientific, eMaint and Landauer have been aiding segmental and regional performance of the company in every quarter.

Notably, these deals will continue to help it in gaining momentum in the markets served by the companyvia improving its customer base. This will in turn aid Fortive’s top-line growth.

Fortive Corporation Price and Consensus

 

Fortive Corporation Price and Consensus | Fortive Corporation Quote

Zacks Rank & Stocks to Consider

Currently, Fortive carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Expedia Group, Inc. (EXPE - Free Report) , Ctrip.com International, Ltd. and ASOS plc (ASOMY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Expedia, Ctrip.com and ASOS is currently projected at 13.4%, 23% and 8%, respectively.

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