GE bids to purchase Instrumentarium

Dec 17, 2002

With an eye on expanding its presence in the operating room, GE Medical Systems has signed an agreement to acquire Finnish healthcare technology firm Instrumentarium for $2.04 billion (U.S.).

The acquisition advances GE's goal of creating an integrated OR, encompassing anesthesia delivery equipment, and patient monitoring and information systems, according to Greg Lucier, president and CEO of GEMS Information Technologies.

"One of the real pressure points of medical errors today is the operating room, which is an incredibly complex environment and one that is not integrated," Lucier told AuntMinnie.com. "We're going to take their technologies and our technologies and create an entire integrated system for operating rooms."

Helsinki-based Instrumentarium has two business units: anesthesia and critical care (including its Datex-Ohmeda, Spacelabs Medical, Deio, and Instrumed units) and medical equipment (comprising its Instrumentarium Imaging, Soredex, Ohmeda Medical, and Medko Medical companies). In 2001, Instrumentarium had sales of $920 million.

With the exception of the vendor's Instrumentarium Imaging unit, Instrumentarium's operations will be integrated within GEMS IT, with the firm's Helsinki base slated to become GEMS IT's European headquarters. Milwaukee-based Instrumentarium Imaging, which offers breast imaging systems and participates in the fluoroscopy market via its Ziehm C-arm product line, will become part of GE's x-ray business, Lucier said.

At the 2002 RSNA meeting, Instrumentarium Imaging highlighted its work-in-progress Diamond DX full-field digital mammography (FFDM) system (formerly called Delta DX), which uses flat-panel amorphous selenium detectors.

Instrumentarium said it expected to install the first Diamond DX in the U.S. in early 2003, and that the product has entered the Food and Drug Administration's premarket approval (PMA) process. Instrumentarium also used its RSNA space to showcase its Delta 32 and Delta 32 TACT (tuned-aperture computed tomography) diagnostic digital spot and 3-D systems, which can be used as stand-alone breast imaging units. Finally, the firm offers computer-aided detection (CAD) systems in partnership with iCAD of Boca Raton, FL.

Waukesha, WI-based GE also offers its own full-field digital mammography system, Senographe 2000D. At this point, however, no specific product integration decisions have been made, Lucier said.

"We see some complementary technologies they have that will complement our digital technology," he said. " I'm confident that we'll take the best of both technologies and over time create an even better mammography system."

Once the deal closes, Instrumentarium president and CEO Olli Riikkala will remain in leadership roles within GEMS and GEMS IT, with an emphasis on the global anesthesia and perioperative businesses and integration across Europe, the vendors said.

Further details, as well as new executive titles for other Instrumentarium executives, will be released at a later date. GE and Instrumentarium expect the transaction will close next year.

Through the deal, GE will initiate a tender offer to acquire all of Instrumentarium's outstanding shares for $40.92 per share in cash. The offer is expected to begin within 30 days, according to the firms.

The transaction is subject to a minimum acceptance condition of 80%, as well as regulatory approvals and other customary conditions. Under the terms of the deal, Instrumentarium's board can recommend a special dividend greater than 72¢ per share, up to an aggregate amount of $204.6 million.

This dividend, which would be subject to approval at Instrumentarium's annual shareholder meeting in March, would reduce the tender offer price by the amount of the special dividend, the companies said. Should the closing of the transaction occur prior to approval of the dividends, the tender offer price would be increased by 72¢ per share. GE said it would also make an offer for all outstanding Instrumentarium options.

By Erik L. Ridley
AuntMinnie.com staff writer
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