Attorney General Ellison sues to block harmful private-equity acquisition of Minnesota medical-device coating company

AG Ellison and Illinois AG join FTC lawsuit challenging proposed private-equity acquisition of Minnesota-based Surmodics that would combine two largest manufacturers of medical-device coatings

AG alleges acquisition would lead to increased concentration, decreased competition, and less innovation in a critical market; will harm medical-device manufacturers, patients, and Minnesota’s economy

April 17, 2025 (SAINT PAUL) — Minnesota Attorney General Keith Ellison announced today that he and Illinois Attorney General Kwame Raoul have joined the Federal Trade Commission’s lawsuit to block the acquisition of Minnesota-based Surmodics, Inc. by private-equity firm GTCR BC Holdings, LLC. The complaint alleges that the deal, which seeks to combine the two largest manufacturers of critical medical-device coatings, is anticompetitive.

Surmodics, based in Eden Prairie, is the largest provider in the United States of outsourced hydrophilic coatings. Hydrophilic coatings allow physicians to maneuver medical devices within the tight confines of the body — for example, within a blood vessel in the brain — without damaging sensitive tissue or vital structures. Medical-device manufacturers often apply hydrophilic coatings to lifesaving medical devices such as catheters and guidewires. Medical devices with hydrophilic coatings are used in a range of interventional neurovascular, structural heart, coronary, and peripheral vascular procedures.

GTCR is an Illinois-based private-equity firm that already owns a majority stake in Biocoat, Inc., which is the second-largest provider of outsourced hydrophilic coatings in the United States.

As Attorney General Ellison, Illinois Attorney General Raoul, and the FTC allege in the complaint, GTCR’s proposed acquisition of Surmodics would create a combined company that controls more than 50% of the market for outsourced hydrophilic coatings. The acquisition would eliminate the significant, existing head-to-head competition between Biocoat and Surmodics, which has spurred lower prices, higher-quality coatings, and product innovation in the outsourced hydrophilic coatings sector. The proposed deal — in a sector that already suffers from few competitors — would change those competitive dynamics and harm medical-device manufacturers as well as patients.

The FTC first sued to block GTCR’s acquisition of Surmodics on March 6, 2025; today, Attorney General Ellison and Illinois Attorney General Raoul both joined the FTC’s complaint. The amended complaint and request for preliminary relief have been filed in U.S. District Court for the Northern District of Illinois to halt the transaction pending an administrative proceeding. A copy of the redacted amended complaint is available on Attorney General Ellison’s website. An unredacted copy of the amended complaint has been filed under seal.

Minnesota has long been known as a world hub for medical technology and has been referred to as “Medical Alley.” The state is particularly known for pioneering medical devices like the wearable pacemaker and for continued med-tech innovation through collaboration among researchers, medical professionals, and industry leaders. Minnesota is home to other manufacturers of outsourced hydrophilic coatings as well. Minnesota’s medical-device sector relies on healthy and fair competition in order to sustain innovation and affordability for patients.

“Fair competition on a level playing field is essential to keeping our economy healthy — and fair competition in the medical-device sector is essential to keeping people healthy,” Attorney General Ellison said. “Minnesota’s medical-device sector leads the nation, and medical-device makers here and across the country need high-quality, reliable coatings in order to design and produce devices that save countless lives in Minnesota and every state. This merger threatens to harm patients and companies across the medical-device industry by disrupting competition, particularly in Minnesota, which leads to higher prices, less innovation, and greater risk. Today, my office is putting Minnesota’s patients and medical-device manufacturers and innovators first by suing to stop this unlawful acquisition.”

Market dynamics

Internal documents from both companies, as well as competitor and customer testimony, recognize Surmodics and Biocoat as head-to-head competitors. In the complaint, the attorneys general and the FTC allege that Surmodics and Biocoat closely monitor each other’s business strategy and often target the same large, small, and startup medical-device manufacturers, also known as original equipment manufacturers (OEMs). This fierce competition has driven Surmodics and Biocoat to improve coating quality and services, lower prices, and increase innovation. The proposed merger would eliminate the benefits of these competitive dynamics, Attorney General Ellison alleges.

Manufacturing hydrophilic coatings requires specialized expertise, years of research, and millions of dollars in investments. Many OEMs prefer to outsource this process instead of handling it in-house. Often, OEMs outsource to coatings manufacturers with a proven track record, like Biocoat and Surmodics. Given these dynamics, it is unlikely any new coating provider could emerge to meaningfully compete with GTCR and Surmodics post-merger, the complaint alleges.

The merger of Biocoat and Surmodics would also result in a level of market concentration that violates the joint Federal Trade Commission/U.S. Department of Justice 2023 Merger Guidelines.

Attorney General Ellison encourages Minnesota consumers and businesses with concerns about antitrust issues to submit a report online via the Antitrust Report Form. Consumers may also call the Attorney General’s Office at (651) 296-3353 (Metro area), (800) 657-3787 (Greater Minnesota), or (800) 627-3529 (Minnesota Relay).