One of the larger transactions to take place in the home medical equipment (HME) space is getting more attention from regulators.
In July, Owens & Minor (NYSE: OMI) announced a deal to acquire Rotech for $1.36 billion. The two parties anticipated the transaction closing later in 2024.
“We are excited to acquire a high-quality company like Rotech – an opportunity that doesn’t come along very often,” Edward Pesicka, president and CEO of Owens & Minor, said during a conference call the day of the transaction.
On Oct. 15, multiple reports surfaced noting that the Federal Trade Commission (FTC) has requested more information about Owens & Minor’s agreement with Rotech. While such an inquiry is not uncommon with blockbuster deals, it could present a speed bump, especially if further requests are made.
As a company, Owens & Minor delivers products and services to health-care organizations and patients in various settings. Its full-year revenue for 2023 was about $10.3 billion, with year-over-year growth partly attributed to gains in Owens & Minor’s patient-direct segment.
Rotech – a company with hundreds of locations across 46 states – has an annual revenue that checks in at about $750 million.
Generally, the FTC will seek additional information on a deal to assess its competitive impact and better understand whether a given transaction will create monopolistic behavior. The FTC also takes into account consumer harm that a transaction could cause.
Moving forward, this back-and-forth review process could become more cumbersome for buyers and sellers.
On Oct. 10, the FTC unanimously approved substantial amendments to the Hart-Scott-Rodino Act (HSR) antitrust rules to, in theory, ensure a more comprehensive examination of transactions.
“The Final Rule excludes several of the more onerous and intrusive requirements from the 2023 proposed rule, but it is pared back only to a point and still significantly broadens the universe of information and documentation that must be reported, which will increase the cost and burden associated with preparing HSR filings,” experts from the law firm Holland & Knight wrote in an online post summarizing the development.
