GE Medical Systems makes bid for Kretztechnik

GE Medical Systems has taken the first step toward acquiring Kretztechnik, an Austria-based developer of 3-D ultrasound systems. GE has agreed to purchase approximately 65.4% of the company’s shares from Medison for ¤12 per share, cash. Within the next two weeks, GE plans to offer ¤17 for all publicly held Kretztechnik shares with the intent of making Kretztechnik a wholly owned subsidiary.

“We have a history of acquiring companies, finding out what their role is, and making those companies successful,” said Omar Ishrak, GE’s vice president and general manager of ultrasound.

Appealing to GE is Kretztechnik’s 3-D technology, particularly its Voluson 730, which allows patients and physicians to view dynamic anatomy in 3-D.

“Right now we see that as primarily an obstetrics machine with some other specialty applications, as opposed to a broad general-purpose machine like our other Logiq products,” said Ishrak.

GE engineers might expand its appeal further by enhancing the product with GE-based technology. Some of those enhancements will be to increase user friendliness.

“It has to be used in day-to-day practice,” he said. “And the only way that is going to happen is if it is easy to use.”

GE appeals to Kretztechnik mostly for what it might do for the sale of its product.

“The strong point of our company was always the technology and the weak point has been worldwide distribution,” said Franz Wiesauer, a member of the Kretztechnik board of directors. “With the GE Medical deal, we feel we will be well positioned for the future, because then we will have our technology and the very strong distribution network of GE.”

Medison acquired Kretztechnik some five years ago, but in 2000 the company sold about 35% of its shares through an initial public offering on the Neuer Market of the Frankfurt Stock Exchange. The transaction with Medison depends on GE being able to purchase at least 90% of the total Kretztechnik shares outstanding. For that to happen, about two-thirds of the shareholders outside Medison will have to sell their stock. The deal, which is also subject to approval by regulatory authorities and other customary conditions, could close in September 2001, according to GE. If it goes through, Medison will receive ¤102 million in cash.

Kretztechnik recorded sales of nearly ¤110 million for the 12 months ended April 30. The company employs about 440 people worldwide and operates subsidiaries in Germany, France, Switzerland, and Spain.

The proposed deal calls for GE Medical Systems, Kretztechnik, and Medison to enter a strategic relationship involving the continued distribution of Kretztechnik products by Medison in certain countries in Asia.

“The distribution network of Medison is very strong in three countries in the Asia market, and so we think that Medison could be our best distributor for our products in these countries,” said Wiesauer, who declined to name the countries.

The deal also allows for cross licensing of technology between Medison and GE.

“Where Medison was our major shareholder and our strategic partner, we did some licensing with Medison and part of this cross licensing is continued even after this deal,” Wiesauer said.