Spacelabs Healthcare to Acquire Cardiac Business from Ferraris Group plc; Acquisition Expected to be Accretive for Company as S
June 29 2006 - 1:30AM
Business Wire
OSI Systems, Inc. (NASDAQ:OSIS) announced today that its
subsidiary, Spacelabs Healthcare, Inc., has entered into a stock
purchase agreement with Ferraris Group plc ("Ferraris") to acquire
Del Mar Reynolds Limited and Del Mar Reynolds Medical, Inc.
(collectively, "DMR") representing Ferraris' Cardiac Division.
Under the terms of the agreement, Spacelabs will pay Ferraris
approximately GBP 14 million ($25.5 million), subject to an
adjustment of plus or minus GBP 1 million ($1.8 million) based upon
revenue and EBITDA results for DMR for the 13 month period ended
September 30, 2006. In addition, there is a further earn-out
provision whereby Spacelabs would potentially pay Ferraris up to
GBP 5 million ($9.1 million) if DMR achieves certain revenue
targets in fiscal 2007. Any further earn-out shall be satisfied, at
Spacelabs' discretion, either in cash or by the allotment and issue
of Spacelabs stock. Spacelabs intends to finance the proposed
acquisition through a senior credit facility. Del Mar Reynolds is a
global developer, manufacturer and seller of cardiac monitoring
systems including Holter recorders, ECG, Stress Systems and related
software and services under the trading names, "Del Mar Reynolds,"
"Hertford Cardiology," and "Hertford Medical." In addition, DMR
operates a Core Lab business that provides clinical trial services
to pharmaceutical companies and clinical research organizations.
OSI Systems' CEO, Mr. Deepak Chopra, stated, "We look forward to
welcoming the customers, vendors and employees of DMR into
Spacelabs Healthcare. We believe DMR will be a positive contributor
to the growth plans of Spacelabs as we provide added scale to
expand DMR's sales opportunities. The acquisition would allow us to
broaden upon our patient monitoring product offering within the
hospital market while essentially doubling the size and geographic
presence of our Clinical Trials business. This transaction
reaffirms our commitment and strategy to aggressively grow our
business." Mr. Chopra further commented, "We are extremely pleased
with the performance of our healthcare business and expect that our
fiscal 2006 healthcare revenue will grow at a double digit rate
driven primarily by the strong operating performance of our patient
monitoring business in the U.S. market. As a result, we anticipate
strong bottom line growth compared to the prior year." Spacelabs
expects that the proposed acquisition will provide the following
benefits to its overall operations: -0- *T - Expanded product
offerings to the hospital market: DMR's cardiac monitoring systems
can be marketed to hospitals in conjunction with Spacelabs' core
products of patient monitoring solutions and anesthesia delivery
systems. - Integration of IT components among product lines: The
product lines of both Spacelabs and DMR include advanced IT
components, providing opportunities for enhanced connectivity
between product lines. - Strengthened geographic presence in the UK
and German markets: DMR is a leader in both the UK and Germany in
cardiac monitoring markets; its presence and connections to
hospitals in these markets is expected to augment Spacelabs'
ongoing sales efforts in these territories. - Enhanced Core Lab
business for clinical trials: Both Spacelabs and DMR operate
clinical trials core lab service businesses (Spacelabs operating
primarily in the U.S. market and DMR operating primarily in the
European market); in combination, they expect this business to
achieve greater critical mass. - Synergistic savings Synergies are
expected to be realized by leveraging upon Spacelabs' existing
global sales and distribution channels and through utilization of
its manufacturing capabilities, global supply chain and existing
support infrastructure. *T According to the unaudited financial
information provided by Ferraris, DMR generated sales of GBP 21.2
million ($38.6 million) with earnings before depreciation and
amortization of GBP 3.8 million ($6.9 million) and profits before
taxation of GBP 1.8 million ($3.3 million). As at 31 August 2005
the total assets attributable to DMR were GBP 28 million ($51
million) including goodwill of GBP 18 million ($32.7 million). In
the six months ended 28 February 2006, DMR generated sales of GBP
9.8 million ($17.8 million) with reported earnings before
depreciation and amortization of GBP 0.4 million ($0.7 million) and
a loss before taxation of GBP 40,000 ($73,000). The Company expects
that once the identified synergies and efficiencies have been
realized the acquisition of DMR will be accretive to the Company.
The proposed transaction is subject to Ferraris receiving
shareholder approval and other customary closing and regulatory
conditions. About Del Mar Reynolds Del Mar Reynolds is a leading
designer, manufacturer and seller of non-invasive diagnostic
cardiology monitoring solutions for hospitals and clinics
worldwide. Additionally, the company provides ECG laboratory
services to pharmaceutical companies undertaking clinical trials,
whereby patient ECG data are recorded, analyzed, tabulated and
interpreted. The company specializes in Holter monitoring products
including Holter recorders, stress systems, ECG machines,
trans-telephonic ECG monitoring, ambulatory blood pressure
monitoring, event recording, apnea monitoring and information
management systems. The business employs approximately 233
personnel in its five offices located in the UK, Germany and the
United States. Del Mar Reynolds is currently a wholly-owned
subsidiary of Ferraris, a UK public company listed in the Official
List of the London Stock Exchange. About Spacelabs Healthcare, Inc.
Spacelabs Healthcare (www.spacelabshealthcare.com) is an
international developer, manufacturer and distributor of medical
equipment and services including patient monitoring solutions,
anesthesia delivery and ventilation systems, pulse oximeters and
sensors and bone densitometers selling to hospitals, clinics and
physicians offices. Additionally, the company provides ECG
laboratory services to pharmaceutical companies undertaking
clinical trials, whereby patient ECG data are recorded, analyzed,
tabulated and interpreted. The company has established brand names
in both medical devices and medical services such as "Spacelabs,"
"Blease" and "Dolphin." The company employs approximately 1,050
personnel in its 14 offices in the UK, Canada, France, Germany,
Finland, Singapore and the United States. The company conducts its
manufacturing and R&D in India, the UK and the United States.
Spacelabs Healthcare is a subsidiary of OSI Systems, Inc., a
US-based, Nasdaq listed company. About OSI Systems, Inc. OSI
Systems Inc. is a Hawthorne, California based diversified global
developer, manufacturer and seller of security and inspection
systems, medical monitoring and anesthesia delivery products, and
optoelectronic-based components, as well as a provider of
engineering and manufacturing services. The company has more than
30 years of experience in electronics engineering and manufacturing
and maintains offices and production facilities located in more
than a dozen countries. OSI Systems implements a strategy of
expansion by leveraging its electronics and contract manufacturing
capabilities into selective end product markets through organic
growth and acquisitions. For more information on OSI Systems Inc.
or any of its subsidiary companies, visit www.osi-systems.com. This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements include information regarding our expectations,
goals or intentions about the future, including, but not limited
to, statements regarding the acquisition of Del Mar Reynolds and
the benefits expected to arise following the closing. The actual
results may differ materially from those described in or implied by
any forward-looking statement. In particular, there can be no
assurance that the acquisition will close on time or at all, or
that, following the close, the combined operations will in fact
achieve any of the currently expected benefits, such as expanded
product offerings, improved connectivity solutions, increased sales
or improvements in the Core Lab business, among other improvements.
Other important factors are set forth in the Securities and
Exchange Commission filings of OSI Systems, Inc. All
forward-looking statements speak only as of the date made, and we
undertake no obligation to update these forward-looking statements.
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