GE, Picker close in on Elscint deals, but uncertainty remains on details

Companies work to complete purchases before RSNA meeting

As the Radiological Society of North America conference approaches, the divestiture of Israeli multimodality vendor Elscint appears to be close to completion. But industry observers may have to wait until the meeting opens to find out exactly who will display the Haifa company's products.

Elscint's parent Elbit Medical Imaging announced in September that it was selling Elscint's nuclear medicine and MRI businesses to GE Medical Systems of Milwaukee and its CT division to Picker International of Cleveland (SCAN 9/30/98). Elbit reported Nov. 16 that it had made progress in the Picker deal by signing a definitive agreement with Picker, but the transaction remains subject to Elscint shareholder approval. A special shareholders' meeting was planned for Nov. 20 in Israel, according to Peter Annand, general manager and COO of Elscint's U.S. headquarters in Rockleigh, NJ. The GE deal is also still in progress but is reportedly close to completion.

The pending divestitures have left the status of Elscint's RSNA booth unsettled. Elscint's CT products will probably be displayed in Picker's booth, and Elscint will display its MRI and nuclear medicine products in its own booth, including the Prima 1TG MRI scanner and VariCam gamma camera, Annand said. Whether the Elscint booth will carry GE's name remains unclear.

In addition to exhibition uncertainty, Elscint and its parent may face other challenges to their divestiture plans. The Director General of Fair Trading for the U.K. announced this month that he is considering whether the proposed transaction between Elscint and Picker should be directed to that country's Monopolies and Mergers Commission for investigation, according to AFX newswire. The agency has jurisdiction over the deal because Picker is a subsidiary of General Electric Company PLC of the U.K. The agency is taking comments through Nov. 26.

Elbit also reported that it has become the target of class-action litigation filed in the name of all holders of Elbit stock warrants since August 1994. The suit claims that since Elbit did not disclose that it was planning to sell the bulk of Elscint's business before the warrants expired, the plaintiffs were prevented from benefiting from the stock increase that resulted from the sale announcements. The plaintiffs are requesting approximately $2 million for all unexercised warrants that expired. Elbit denies the claim and will work to have it dropped, according to the company.

Finally, Elscint reported financial results this month that revealed the effect of the pending divestitures on the company's bottom line. Elscint reported third-quarter (end-September) revenues of $63 million, compared with $75.1 million for the third quarter in 1997. The firm attributed its slumping sales to customers' concern about GE's and Picker's future plans for the respective businesses.