Following a victory in court, leading private equity firm GTCR has announced it intends to promptly close its acquisition of medical device coating manufacturer Surmodics, putting an end to an unsuccessful challenge from the Federal Trade Commission (FTC) and the Illinois and Minnesota attorneys general. This had been the FTC’s first merger challenge under the Trump Administration. On November 10, 2025, Judge Jeffrey Cummings of the Federal District Court for the Northern District of Illinois denied the plaintiffs’ bid for a preliminary injunction, finding that they had failed to show that a revised transaction by the defendants, which included a remedial divestiture, might still substantially lessen competition. On November 17, 2025, the plaintiffs indicated in a status report that they did not intend to appeal that decision, and the court terminated a previously entered temporary restraining order, allowing the merger to close.
The case is an important example of parties successfully “litigating the fix” by defending a remedy proposal in litigation. The Trump Administration remains hostile to the practice, despite expressing renewed openness to resolving merger challenges without litigation through structural remedies. However, the agencies have stressed the importance of raising potential remedies early in the process, and in this case the parties did not identify a proposed divestiture until after the FTC filed its complaint. In addition, the parties proposed a partial divestiture of the overlapping business assets already owned by GTCR, while the FTC pressed for a full divestiture. This case underscores the importance of thinking strategically about the entire lifespan of a merger review in deciding whether and how to propose and stand on remedies.
Background
GTCR BC Holdings, a private equity firm that invests in several industry sectors, including healthcare, entered into an agreement to purchase medical device coating company Surmodics for $627 million in May 2024. GTCR had previously acquired a majority interest in Biocoat, a different medical device coating manufacturer, in 2022. Both companies sell their coatings to medical device OEMs, who use the coatings on their devices to minimize friction on interventional medical devices, including catheters and guidewires.
In March 2025, The FTC unanimously voted out an administrative complaint to challenge the deal. FTC Commissioners Rebecca Slaughter and Alvaro Bedoya, Democrats subsequently removed from the FTC by President Trump, released a statement praising the complaint, calling it a “particularly valuable use of Commission resources” because it involved both private equity roll-up and a healthcare market.
The FTC alleged that Biocoat and Surmodics were the first and second largest suppliers of “outsourced hydrophilic coatings,” and the combined company would control more than 50 percent of an already concentrated market (there were allegedly only two other significant competitors). The complaint alleged that other coatings, including hydrophobic coatings, cannot be used to coat catheters and other devices damaged by high heat. The complaint further identified “outsourced” coatings as a distinct market because the coatings are so technically demanding that many OEMs cannot afford to invest in them, and those that can choose not to.
The FTC Rejects GTCR’s Remedy Proposal...
The FTC filed a complaint in federal court in mid-April 2025 for a preliminary injunction to halt the deal until the completion of administrative litigation. According to GTCR’s opposition, they raised a remedy that would partially divest Biocoat’s hydrophilic coating assets in late April, expanded it in May 2025 to include a facility and employee divestiture following rejection of the initial proposal, and continued to develop it through evaluation of bidders and execution of a divestiture agreement with Integer, a contract manufacturing and development firm that had previously tried and failed to develop its own hydrophilic coatings products, thereafter. GTCR contended that the FTC “remained silent on the sufficiency” of the revised proposal and the executed agreement.
In its reply, the FTC contended that the proposed divestiture excluded key assets and personnel that Integer would need to compete, that license-back provisions would hinder Integer’s ability to differentiate, and that Integer’s previous failures to develop its own products made it ill positioned to compete going forward. The court urged the parties to consider settlement, instructing GTCR to review the FTC’s objections and submit proposals to allay them. But the parties were unable to reach accord, and the matter proceeded to a hearing on the FTC’s request for a preliminary injunction.
...but the Court Accepts It
In a hearing on November 10, 2025, Judge Cummings denied the FTC’s request. The court held that the divestiture executed by GTCR in the course of litigation resolved the competition concerns raised by the FTC. In an oral ruling, the court took issue with the agency’s reliance on past revenue data as an indicator of market share or future competition given the realities of medical device development and approval and criticized the FTC’s market definition for excluding competition from in-house coating development. The court further found that Integer was an “exceptionally well qualified divestiture buyer” and that the defendants had shown it would “vigorously attempt to compete in this space” going forward.
Takeaways
The Biden Administration disfavored settlement and preferred to challenge mergers it found anticompetitive in court. By contrast, the Trump Administration has hoped that its open position towards remedies would help to facilitate effective settlements. The agencies have accordingly emphasized that parties should offer remedies as early as possible in the process to allow time to shape a mutually satisfactory settlement package. The policy appears to have had some success, with divestiture settlements reached in a number of merger cases, including UnitedHealth/Amedisys, ACT/Giant Eagle, Keysight/Spirent, and Synopsys/Ansys.
However, merging parties have historically found success in “litigating the fix.” FTC Chairman Andrew Ferguson has identified this trend as a problem for enforcers, stating that remedies offered after the conclusion of the HSR process incur significant costs for agencies and courts and may create bad incentives for merging parties. FTC Bureau of Competition Director Daniel Guarnera has suggested that parties may be less likely to delay proposals or to attempt to litigate a fix because parties know they will get a fair hearing on their proposals.
But this case shows that the carrot offered by agencies may not be enough and that strategically delaying remedy proposals may be advantageous. Indeed, Chairman Ferguson acknowledged that GTCR and Surmodics put the FTC in an “annoying position,” effectively requiring the agency to prove the remedy’s insufficiency. Because the FTC insisted on a full divestiture and elected not to engage in remedy negotiations beyond rejecting GTCR’s initial proposal, the parties were able to set the anchor point for the court’s evaluation of the post-merger world. The parties bolstered their case by taking the time to identify a divestiture buyer, fully executing an agreement, and developing substantial evidence of the buyer’s ability to compete effectively.
The case shows that, notwithstanding agency policy positions or guidelines, courts remain receptive to evaluating remedies offered by the parties on their merits. In remarks prior to the court’s decision, Chairman Ferguson had promised to evaluate ways to avoid being forced to litigate the fix. The parties’ success in this case likely will further motivate those efforts.
