June 12, 2017 / 5:58 PM / a month ago

Halyard Health explores sale of hospital product unit: sources

(Reuters) - U.S. medical products supplier Halyard Health Inc (HYH.N) is exploring a sale of its surgical and infection prevention business that could fetch more than $600 million, people familiar with the matter said on Monday.

The divestment would allow Halyard to shift its focus away from commoditized hospital products, such as sterilization wrap, surgical drapes and gowns, and concentrate on its medical devices business, focused largely on post-operative pain management.

Halyard has retained investment bank Deutsche Bank AG (DBKGn.DE) to run a sale process for the surgical and infection prevention business, the people said. There is no guarantee that the process will result in any deal, the sources said.

The sources asked not to be identified because the deliberations are confidential. Halyard Health and Deutsche Bank did not immediately respond to requests to comment.

Headquartered in Alpharetta, Georgia, Halyard has a market capitalization of $1.7 billion. The company operates 11 manufacturing facilities across several countries and employs about 12,700 people.

The surgical and infection prevention unit for sale is Halyard's largest business by revenue, notching about $1 billion in sales last year, but it has also been a drag on the company's growth, seeing sales shrink year over year.

In its most recent quarter, Halyard reported that sales in its surgical and infectious diseases business declined by 3 percent because of falling prices. Meanwhile, its medical devices business gained 15 percent during the same period.

In 2016, Halyard acquired Corpak MedSystems for $174 from buyout firm Linden Capital Partners. The move built on Halyard's existing presence in feeding tubes.

"We continue to invest in fueling our growth pipeline to shift our portfolio to higher margin faster growing medical devices," Chief Executive Officer Robert Abernathy said during Halyard's quarterly earnings call last month.

Halyard became an independent company in 2014 when it was spun off from parent company Kimberly Clark Corp (KMB.N), which sells brand-name hygienic products, such as Kleenex tissues and Huggies diapers.

Reporting by Carl O'Donnell and Greg Roumeliotis in New York

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