Dive Brief:

• Illinois and Minnesota have joined the Federal Trade Commission’s legal challenge to the $627 million private equity takeover of Surmodics.
• The FTC, which shared the update Thursday, has filed an amended complaint to add Illinois and Minnesota as co-plaintiffs in its case against private equity firm GTCR.
• Details of the case against Surmodics and GTCR are unchanged. The FTC continues to claim the deal will eliminate competition that has lowered prices, raised quality and driven innovation.

Dive Insight:

Surmodics provides outsourced hydrophilic coatings for devices. GTCR owns a majority stake in another coatings company, Biocoat. Surmodics accepted a $627 million takeover offer from GTCR in May 2024. The FTC’s requests for information delayed the closing of the deal, which was originally scheduled for last year, and in March the federal agency filed a complaint against Surmodics and GTCR.

According to the FTC’s complaint, GTCR hatched a plan to consolidate the outsourced hydrophilic coating market. The private equity firm bought a majority stake in Biocoat in 2022. A heavily redacted section of the complaint that lays out GTCR’s alleged plan starts with a presentation by the firm in August 2022.

The FTC has identified Surmodics and Biocoat as the number one and two players, respectively, in the market for outsourced hydrophilic coatings and calculated that they collectively account for more than 50% of the sector. Harland and DSM are, respectively, the third and fourth largest players, according to the FTC. The FTC named other “fringe competitors” but said they lack Surmodics’ and Biocoat’s abilities.  

Illinois, where GTCR is based, and Minnesota, where Surmodics is headquartered, have joined the FTC’s complaint for a preliminary injunction to stop the takeover. 

“The proposed acquisition of Surmodics by a private equity firm represents a troubling trend of wealthy investors attempting to limit competition and innovation in a market while extracting advantages that come from eliminating competitors,” Illinois Attorney General Kwame Raoul said in a statement. “If approved, this acquisition would increase prices for Illinois residents by putting profits before people.”

Surmodics has not commented on the FTC’s actions publicly since the federal agency filed the original complaint in March. At that time, the company said it “respectfully disagrees with the FTC’s decision and remains committed to completing the merger.” Surmodics called the merger “pro-competitive.”