Daimler-Benz's divestiture drivecatches up to Dornier Medizintechnik

Singapore Technologies buys stake in Acoustic Imaging parent

German industrial giant Daimler-Benz Aerospace (DASA) announcedlast week that it has sold a majority interest in its DornierMedizintechnik (DMT) subsidiary to Singapore Technologies. Thedeal gives the Asian conglomerate an 80% share of DMT, which isthe parent of lithotripsy firm Dornier Medical Systems and ultrasoundvendor Acoustic Imaging. DASA will retain ownership of 20% ofDMT.

The acquisition is the latest of several divestiture initiativesDASA parent Daimler-Benz AG has launched in recent months as itmoves to cut costs and jettison unprofitable businesses throughoutits far-flung industrial empire. For example, earlier this yearDaimler cut off funds to its Dutch aircraft subsidiary, FokkerNV, which had been hemorrhaging red ink.

Rumors have abounded for years that Acoustic Imaging was duefor divestiture. Industry gossip at various times claimed thatthe Phoenix-based company was about to be closed down or soldoff, with ThermoTrex Medical mentioned as a suitor at one point(SCAN 11/9/94 and 7/19/95).

When viewed in light of last week's announcement, those rumorsprobably carried some validity. Daimler-Benz acknowledged in 1993that it was interested in finding a corporate partner for Dornier'smedical business (SCAN 11/17/93), and probably started tongueswagging as it shopped the company to potential investors.

"When you go out and look for a partner you contact manypeople," said Steven Kaska, director of worldwide strategicmarketing for Daimler. "Now that the acquisition is over,the rumors should cease, and the company is looking for a periodof stability and growth."

Daimler's decision to exit the medical industry is most likelydue to the difficulties both Acoustic Imaging and Dornier haveexperienced. Dornier is a major player in the lithotripsy market,which looked promising in the late 1980s but has lost some ofits allure due to competition from less expensive technologies.Likewise, Acoustic Imaging has a good reputation for gray-scaleimaging but was slow to bring a color-flow Doppler scanner tomarket. It has seen its position in the modality squeezed by largerplayers like Acuson, ATL, and Diasonics. Dornier Medizintechnikhad revenues last year of $134.5 million.

Ultimately, Daimler decided to refocus on its core businessesof transportation and aerospace, according to Kaska.

"If you look at the strategic vision of Daimler-Benz,it is a transportation and aerospace company," Kaska said."I really don't think the medical business was a long-termfoundation for the Daimler-Benz group."

Ironically, Singapore Technologies has a corporate profilesimilar to that of Daimler-Benz. It is one of the largest industrialconglomerates in Asia and is involved in the aerospace, electronics,automotive, semiconductor, and financial services industries.It has about 15,000 employees, compared with about 700 at DornierMedizintechnik.

Until now, Singapore Technologies has had only a minor presencein the medical industry. In 1994, it partnered with Dornier ina joint venture in Asia relating to lithotripsy. That partnershiplaid the groundwork for last week's acquisition, Kaska said.

The company is enthusiastic about building the Dornier business,according to Ho Ching, managing director of Singapore Technologies.

"We are delighted with our new investment in DMT,"she said. "It gives us an important starting block for ourinvolvement in the medical technology sector, which we hope tobe able to expand at an appreciable rate."

Meanwhile, Acoustic Imaging's plan to consolidate with DornierMedical Systems continues, although the firms are reconsideringtheir intention to retire the Acoustic Imaging brand name (SCAN11/22/95).

"We have had an outpouring of customer requests not todo that," Kaska said. "We underestimated the marketrecognition that we had with Acoustic Imaging over the past 10years. It's still under evaluation as to whether or not we aregoing to drop the Acoustic Imaging marque."

In other Dornier news, Karl Jonietz was named president andCEO of Dornier Medical Systems and will head both DMS and AcousticImaging. Jonietz comes to DMS from the Lenexa Medical divisionof Nellcor Puritan Bennett. He replaces David Gill, who left DMSlast year, and former Acoustic Imaging chief John Kingsley, whopassed away last August.