The Federal Trade Commission sued to block private equity firm GTCR BC Holdings' acquisition of medical device coating company Surmodics on Thursday, alleging the deal is anticompetitive because GTCR holds a majority stake in Surmodics’ competitor Biocoat.
The deal, which was announced in May, was valued at $627 million and would have given GTCR more than 50% of the market for outsourced hydrophilic coatings, according to the FTC. Medical device manufacturers apply the coatings to devices such as catheters and guidewires so physicians can navigate the body’s tight spaces without harming delicate tissue or important structures.
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The FTC voted unanimously to file a complaint and temporarily block the transaction.
Surmodics is the largest supplier of outsourced hydrophilic coatings, followed by Biocoat. Both target the same device manufacturers, fostering competition that has improved coating quality and services, reduced prices and increased innovation, according to the FTC complaint.
Medical device manufacturers outsource the coatings because producing them in-house requires technical expertise, extensive research and multi-million-dollar investments. Because of the high cost of entry, it’s unlikely a new supplier would enter the market and compete at the level of Surmodics and Biocoat, according to an FTC news release.
At the time of the announcement last year, GTCR expected to close the deal in the second half of last year and take Surmodics private.
