Varian, Inc. to Acquire Magnex Scientific Ltd.
Varian, Inc. announced that it has entered into a definitive agreement to acquire Magnex Scientific Limited for $32 million in cash and assumed net debt, subject to certain net asset adjustments. The transaction will also include an opportunity for additional purchase price payments over three years, depending on performance relative to certain financial targets. Magnex is a world leader in the design and manufacture of magnetic resonance (MR) imaging magnets. It is also a major supplier of vertical high-resolution nuclear magnetic resonance (NMR) magnets, superconducting magnets for Fourier Transform mass spectroscopy (FTMS), and MR microscopy gradients.
Varian, Inc. expects the acquisition to generate external revenues of $15 million to $18 million in the first twelve months, excluding internal magnet shipments for its existing NMR and MR imaging product lines. Magnex currently provides about $10 million annually of product, mainly MR imaging magnets, to the Company. The Company also expects the acquisition to have a relatively neutral impact on earnings for the first six months and to be accretive thereafter. This outlook excludes the amortization of acquisition-related intangibles and the transition impact on cost of sales of writing up acquired inventory, both of which the Company is analyzing with the assistance of an outside valuation firm.
In connection with the acquisition, Varian, Inc. also plans to rationalize its field support administration in the U.K. that is expected to result in charges to earnings totaling approximately $2.0 million to $2.3 million, which will be charged in the first and second quarters of fiscal year 2005.
Located in Oxford, U.K., Magnex will be operated as a wholly owned subsidiary of Varian, Inc. Varian, Inc. will continue its long-time partnership with Oxford Instruments Superconductivity, which supplies high-resolution magnets for the Company's NMR spectrometer systems, and Magnex will continue to offer its complete range of MR imaging, NMR, and FTMS magnets to its existing customer base.
"The acquisition of Magnex is strategic to advancing Varian, Inc.'s drive into magnetic resonance imaging," notes Garry W. Rogerson, President and CEO, Varian, Inc. "Magnex's expertise in the design of MR imaging magnets will help Varian, Inc. grow in the areas of pharmaceutical and medical research. In addition, since magnet technology is core to both MR imaging and high-resolution NMR, having this capability further supports Varian's efforts to expand the use of these information rich detectors."
The acquisition follows a successful five-year relationship during which Magnex has been manufacturing state-of-the-art MR imaging magnet systems for Varian, Inc. It also builds on Magnex's supply to Varian, Inc of the Actively Shielded 800MHz magnet. "This acquisition affords Magnex the opportunity to accelerate the development of cutting-edge magnet technology to grow our position in MR imaging magnets as well as to improve customer care and after-sales support through Varian, Inc.'s global sales and support infrastructure. We look forward to this exciting new phase in the history of Magnex and its continuing development within the Varian, Inc. family," said David Rayner, Managing Director, and a founder, of Magnex Scientific Ltd.
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