Friday, December 10, 2004

Medical equipment consolidation -- part two Part one Smiths Group to buy Medex British firm Smiths Group PLC has agreed to buy the US's Medex Inc,. for around $925 million in cash and stock. Medex makes intravenous catheters that prevent needle-stick injuries. It also sells patient ventilation equipment, infusion pumps, and other equipment used in the operating room. Smiths Group has four divisions. Its equipment medical group makes vital-sign monitoring equipment, and disposable medial equipment, like intubation and tracheotomy systems). This transaction is a great illustration of how the equity market acts as a catalyst in the whole oligopoly/acquisitions game. The majority of Medex shares are owned by the equity firm One Equity Partners, a division originally of Bank One, but after its merger, part of J.P. Morgan Chase. One Equity bought the 40-year-old company in 2003 from the founders, then helped Medex to acquire the intravenous catheter division of Ethicon, a Johnson & Johnson division. Medex itself was employee owned before that, after it was spun off by French glass, plastics, and ceramics manufacturer Compagnie de Saint-Gobain in 2001. Smiths Group is more of conglomerate than a new oligopoly. In addition to its Medical Equipment division, the company now has divisions in Aerospace (navigation systems. landing gear), Detection (fingerprint ID technology, x-ray screening systems), and Specialized Engineering (hose and duct systems). But the company has publicly stated a policy of discarding lower-profit businesses and build-up stronger divisions in areas with good profits. To that end, it has made several de-acquisitions. In 2002 it sold its Air Movement and Cable Management division to a private equity group headed by HSBC Bank. In 2003, it sold off its Polymer Sealings division to Swedish polymer specialist Trelleborg AG. The firm also dumped a number of smaller businesses in 2002 and 2003, in industrial equipment, marine seals, and medical areas. On the acquisition side, Smiths Group acquired, just in 2004: US avionics company Aerospace, inc. US respiratory care specialist DHD Systems Chinese company Tianjin Timing Seals Co. Ltd. US company SensIR LLC, a make of infrared analyzers for hazardous materials Trak Communications, a US maker of microwave systems US airplane engine component manufacturer Dynamic Gunver Technologies (DGT) Systems Cyrano Sciences Inc., a US firm which (great name) makes chemical "sniffing" detection equipment Note the flood of US acquisitions by a British company. As the dollar keeps dropping, US companies are turning form the acquirer to the acquiree. 6:12:18 PM

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