I have been holding this company as a possible takeover by a major
player such as Baxter, Abbott or J&J. They make IV infusion
systems aimed at the pediatric population. Now they have acquired Ivac
and have international expansion plans. The insiders own 82% of the
18M shares and the float is 2.9M. This acquisition either makes them
a real player in this field or it makes them a juicier takeover. I would appreciate any other insights into this from others following
this story.
"8/27/96 Bid Of Advanced Medical Seeks Overseas Link
By Kathryn Kranhold
Staff Reporter of The Wall Street Journal
Advanced Medical Inc.'s $400 million bid for closely held Ivac Medical Systems Inc. is largely intended to position the new entity for foreign growth, with Japan, Latin America and Southeast Asia at the top of the list.
Just hours after announcing the all-cash acquisition yesterday, officials at both companies were already talking about the possibility of linking with various overseas partners as a way to further expand the world-wide market share for their medical devices.
William Mercer, currently Ivac's president and slated to become president of Advanced Medical, said the company initially will derive one-third of its revenue from overseas operations but hopes to boost that to 50% by the end of the decade. For example, Mr. Mercer said the company is looking for a partner in Japan to distribute its intravenous infusion-therapy products, which monitor liquids and medication administered directly into the bloodstream. Meanwhile, Ivac already is distributing certain devices in Russia and hopes to build on that base.
Elsewhere, San Diego-based Advanced Medical's new management team said it also is looking to make additional acquisitions -- perhaps as large as the just-announced deal -- to expand the number of products that will be offered. Joseph Kuhn, who is currently president of Advanced Medical and will become executive vice president and chief financial officer of the new concern, said part of the focus is to tap the market for medical devices that can be used both in hospitals and at home.
Once the acquisition becomes final, Mr. Mercer said the combination will be able to more effectively compete with multibillion dollar competitors such as Baxter International and Abbott Laboratories as consolidation sweeps through various segments of the health-care business. In one fell swoop, Mr. Mercer said, "we become a company that has to be taken more seriously."
The new company is betting that it will be better able to compete with global leaders supplying health-care products and devices by broadening its focus on niche markets in the U.S. and around the world. Mr. Mercer said that further consolidation in the health-care field, and especially among medical-device manufacturers, is inevitable.
Advanced Medical said it will finance the acquisition primarily with $315 million in new debt and $125 million in subordinated notes. While neither of the two companies was willing to predict future net income levels, Mr. Mercer said that the new entity "can be profitable in 1997." But he said that will depend on how quickly the reorganization is completed and the size of the eventual restructuring charge.
Under the new structure, Mr. Kuhn, who led the turnaround of Advanced Medical as its president, will become executive vice president and chief financial officer of the new concern.
Jeffry M. Picower, the majority stockholder in Advanced Medical, will remain as chairman of the company.
(END) DOW JONES NEWS 08-27-96
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