GE Capital buys Ziegler Leasing as part of Ziegler’s exit from medical

January 22, 1997

Ziegler divested refurbishing group last yearZiegler Leasing no longer exists as an independent lessor of medical equipment. The West Bend, WI, company, which has specialized in the leasing of medical imaging, laboratory, and other medical

Ziegler divested refurbishing group last year

Ziegler Leasing no longer exists as an independent lessor of medical equipment. The West Bend, WI, company, which has specialized in the leasing of medical imaging, laboratory, and other medical devices, as well as other commercial equipment, will continue, however, as a part of GE Capital Services of Stamford, CT. The new name of the company, according to sources, will be GE Capital Healthcare Finance.

GE Capital Services confirmed that the acquisition has taken place, but executives declined further comment, issuing only a terse statement on the purchase.

"This acquisition supplements GE's overall presence in this important market," the statement said. "GE Capital Services expects the expertise and excellent reputation of Ziegler Leasing to bring additional value to its existing healthcare customers as well as broaden its served customer base."

Sources at the former Ziegler Leasing confirm that the operation will be used primarily by GE Medical Systems to finance the purchase of equipment manufactured by competitors of the Milwaukee giant.

GE Capital is not wasting any time in absorbing the leasing operation. Sources at the West Bend office confirm that the operation is scheduled to move to offices owned by GE in Waukesha, WI, in late March. West Bend-based executives have begun meetings to smooth the transition to becoming a part of GE.

Part of that transition will be title changes for key executives. Thomas Norman, formerly vice president of asset management at Ziegler Leasing, will become asset manager in the new GE organization. Mark Sedlmeier, previously president of Ziegler Leasing, will be sales manager.

Rumors regarding the sale of Ziegler Leasing began last November, when parent The Ziegler Companies announced the signing of a nonbinding letter of intent to sell the subsidiary to a major financial services company. On Dec. 23, The Ziegler Companies released a brief statement that the leasing operation had been sold "to a major financial services company.

Ziegler Leasing executives, as well as Peter Ziegler, president and CEO of The Ziegler Companies, have declined to elaborate on the deal.

A memorandum issued Nov. 1 by Peter Ziegler to company employees, however, indicates Ziegler was pursuing the sale as a means of focusing on its traditional securities market.

"Our decision to accept GE Capital's offer was based on our desire to emphasize our core securities business in the future," the memo stated. "GE Capital has represented to us that (the acquisition) is viewed by them as a strategic purchase and that they have a preference to retain the management team and employee base."

The cash offer, as made in November, was for approximately $17 million. The Ziegler Companies expects to realize about $11 million, after tax, which approximates the book value of Ziegler Leasing as of Sept. 30, 1996. Proceeds of the sale are expected to be reinvested in securities-related activities.

The sale caps a turbulent year for Ziegler Leasing. Less than a year ago, the company had been a leading player in the used equipment industry. Ziegler Medical Equipment Group, which was created in 1993 as a wholly owned subsidiary of Ziegler Leasing, refurbished and remarketed used imaging equipment. As part of that operation, the company ran a used equipment processing facility in Omaha, NE.

In mid-1996, Ziegler Medical Equipment Group was preparing to embark on an aggressive telemarketing effort and to field a dedicated direct sales force to remarket equipment. Then, in July 1996, top management at The Ziegler Companies decided to pull back from that effort. In September, the refurbishing operation was sold to Shared Medical Services of Middleton, WI (SCAN 7/31/96 and 8/28/96).

At the time, the decision was described by company executives as a conservative move in the face of an uncertain market for used equipment. They emphasized that the company remained committed to remarketing used equipment as a complement to Ziegler Leasing's business, which assumed ownership of imaging equipment following the expiration of leases. Company executives decline to speculate on the record as to whether the decision was part of a planned exit from the medical imaging industry by The Ziegler Companies.