Water Street Healthcare Partners, a private equity firm focused on health care, has entered into a definitive agreement to sell its gastrodiagnostic device company Sierra Scientific Instruments to Given Imaging (GIVN) for $35m in cash.

Water Street’s agreement to sell Sierra Scientific to Given Imaging culminates the firm’s investment in the specialty diagnostic market in 2007 when it acquired majority ownership in Alpine Biomed.

Water Street subsequently facilitated three acquisitions, including a product line from Medtronic, to build Alpine Biomed into a specialty diagnostic device leader serving the gastroenterology and neurology clinical markets.

Simultaneous to merging Alpine Biomed’s gastrodiagnostic division with Sierra Scientific in 2009, Water Street sold the neurodiagnostic division to Natus Medical for $43.2m.

Water Street was instrumental in building Sierra Scientific as a provider of diagnostic devices for the clinical gastroenterology market. The firm merged Sierra Scientific with a division of its specialty diagnostic device company, Alpine Biomed, in 2009 to create the market leader.

Homi Shamir, president and chief executive officer of Given Imaging, said: “Sierra Scientific is a strong, well managed company respected by the GI community for its cutting-edge products which deliver reliable performance. The acquisition strengthens Given Imaging’s position as the global leader in the gastroesophageal diagnostic market. With manometry, impedance, catheter pH and Bravo wireless pH products, we advance our vision of providing total world-class solutions to our GI customers’ evolving product needs.”

John Arnott, who was recruited by Water Street to lead Alpine Biomed and currently serves as chairman of Sierra Scientific, said: “It has been rewarding to play a lead role in building this organization into the market leader. The fact that Given Imaging approached us about buying Sierra Scientific to further enhance its GI solutions affirms our success in creating a company of significant value.

“Sierra Scientific’s customers and employees will prosper from becoming part of Given Imaging’s global network of resources and broad range of GI solutions.”

Given Imaging is a provider of GI diagnostic and monitoring solutions.