As borrowing costs continue to fall, private equity (“PE”) firms are taking advantage to deploy unused capital in the acquisition of public companies ripe for the taking.

So far this year, investors have been focused on the AI industries and companies that enable or benefit from this burgeoning industry. This has led to opportunities for PE firms to acquire companies in other industries at cheaper relative values.

We’ve seen this play out as recently as last month, when gaming giant Electronic Arts (EA) was taken private by a group of investors which included PE firms Silver Lake and Affinity Partners. This deal culminated in the largest leveraged buyout (“LBO”) in history.

And now, a similar play is unfolding in the health care sector.

Earlier this week, it was announced that Blackstone and TPG are taking medical diagnostics firm Hologic (HOLX) private in a deal worth $18.3 billion.

Under the agreement, the PE firms will acquire all outstanding shares of the company for $76 in cash. The deal also includes a non-tradable contingent value right (“CVR”) of up to $3 a share in payments of up to $1.50 each.

The CVR will be issued upon closing and distributed contingent on the achievement of certain revenue targets for Hologic’s breast-health business for fiscal year 2026 and 2027.

According to reports, the firms involved plan to prioritize research, pursue acquisition activities, and develop new products without the pressure of meeting expectations for quarterly earnings results.

This acquisition comes as Blackstone and TPG renewed their pursuit of the medical diagnostics firm following talks over the past year. 

The deal, which is expected to conclude in the first half of 2026, marks the largest acquisition of a medical equipment company since 2006, when Boston Scientific acquired Guidant Corporation for $27 billion. 

A group of lenders which include Citi and Bank of America have committed over $12 billion in a financing package designed to help Blackstone and TPG’s acquisition.

Hologic is a medical equipment firm specializing in women’s health. Its core offerings currently revolve around diagnostics related to breast, sexual, gynecological, and skeletal health among others. In addition, it also manufactures equipment used in molecular diagnostics, sample collection, and other screening tests for contagious diseases like COVID-19.

The company’s products are considered innovative, hard to replicate, and has enjoyed preferential treatment from both clinicians and patients. Moreover, its focus on women’s health have enabled it to secure a niche in the health care market that has been underserved for years.

Based on as-reported financials, the market may think Blackstone and TPG are taking on a gamble in a company that is declining and is no longer generating above-average returns. However, Uniform Accounting tells a different story.

While Hologic’s Uniform return on assets (“ROA”) have fallen from past highs of 61% in 2021 to 21% in 2024, the returns it’s generating is still well above the 12% corporate average.