Masimo receives offer of up to $950 million for consumer business

U.S. 100 dollar notes are seen at a bank in this picture illustration in Seoul

By Christy Santhosh

(Reuters) -Masimo said on Monday a potential joint venture partner is prepared to offer $850 million to $950 million for its consumer business, which includes health and audio products.

Masimo and the potential partner, which it did not name, are in active discussions regarding the terms of the joint venture, where the medical device maker has proposed to handle the process and outcome of its ongoing litigation with Apple.

The company is engaged in a legal battle with Apple over a patent dispute on the blood oxygen sensors in newer Apple Watch models, forcing the iPhone maker to sell the devices without the feature.

Masimo intends to negotiate for a higher price for its consumer business, which includes health tracking watches and audio devices such as speakers and headphones. It will also continue to consider a possible spinoff of the business into a new public company.

The company had acquired consumer audio products maker Sound United in 2022 for about $1 billion — an acquisition that was poorly received by investors and sent its shares tumbling.

BTIG analyst Marie Thibault said the proposed offer was lower than the Sound United deal, albeit higher than what the brokerage expected.

"The cash deal would be enough to defray much of (Masimo's) $876 million debt obligations," Thibault wrote in a note.

Masimo is locked in a proxy contest with activist investor Politan Capital Management, which has long criticized the California-based company's board oversight and expressed concerns about its purchase of Sound United.

Quentin Koffey-owned Politan, which owns nearly a 9% stake in Masimo, has been seeking to get its own candidates elected on the company's board.

(Reporting by Christy Santhosh in Bengaluru; Editing by Shilpi Majumdar)