Mallinckrodt pays $75 millionto acquire Liebel-Flarsheim

January 31, 1996

Contrast maker gains position in CT and angioThe Mallinckrodt Group has reinforced its position in the growingx-ray angiography and CT contrast markets with the purchase ofits longtime partner Liebel-Flarsheim on Jan. 22. The St. Louis-based

Contrast maker gains position in CT and angio

The Mallinckrodt Group has reinforced its position in the growingx-ray angiography and CT contrast markets with the purchase ofits longtime partner Liebel-Flarsheim on Jan. 22.

The St. Louis-based pharmaceutical and medical device manufactureragreed to pay an investment group headed by former Liebel-FlarsheimCEO Philip Vollmer about $75 million for the venerable Cincinnaticompany. Vollmer resigned upon completion of the the deal to pursueother investment opportunities, according to Tom Dunham, COO ofLiebel-Flarsheim.

Dunham and the rest of the current management team will continueto run the firm. Dunham will report to Mallinckrodt Medical Imaging,the imaging contrast division of Mallinckrodt Group. The companywill continue to operate under the Liebel-Flarsheim name, andno immediate personnel or product line changes are planned, accordingto John Hesemann, imaging vice president for contrast media atMallinckrodt Medical.

"We intend to operate it as is for the foreseeable future,"he said.

The buyout is a natural extension of the long standing partnershipbetween Mallinckrodt and Liebel-Flarsheim's power injection businesses,Hesemann said. The two companies married interests in 1992 tomake Liebel-Flarsheim's injection systems compatible with Mallinckrodt'sUltraject prefilled syringes for Mallinckrodt's full line of x-raycontrast media.

The acquisition makes sense considering the tenor of the currentmarket, according to Hesemann.

"Hospitals are asking for total system solutions versuspurchasing individual products. By including Liebel-Flarsheim'sproducts with those of Mallinckrodt, we're able to provide a completecontrast medical system," he said.

Hesemann also sees potential synergies in product developmentby combining Liebel-Flarsheim's patented injection technologywith Mallinckrodt's patented prefilled syringe technology. AndLiebel-Flarsheim's worldwide dealer and service network couldhelp strengthen Mallinckrodt's presence overseas.

"The two companies are similar in culture and that shouldhelp us integrate operations. We're both Midwestern. We're bigcompanies but we're small in our respective fields. And we havethe experience of working together," he said.

Liebel-Flarsheim's annual revenues have more than doubled sincean investment group headed by Vollmer acquired the manufacturerin 1986. The company reported sales of $59 million in the fiscalyear ended March 1995. The firm, which has manufactured medicalx-ray devices since 1916, employs 269 people.

Medrad, Liebel-Flarsheim's only notable competitor in the burgeoningcontrast injector field, was purchased last year. Schering AGof Germany spent $180 million to acquire Medrad, which is basedin Pittsburgh (SCAN 8/30/95).

Aided by joint development contracts with Nycomed Imaging andBracco, Medrad carved out about a 70% share of the power injectormarket. Liebel-Flarsheim captured the other 30%, Hesemann said.

Medrad dominates the U.S. angiographic market segment, accordingto Hesemann, while Liebel-Flarsheim has enjoyed about half ofall new power injector installations relating to CT in recentyears, he said. In terms of angiography, Liebel-Flarsheim holdsa larger share of the market in Europe than in the U.S.

Liebel-Flarsheim also manufactures x-ray urological tablesand components for numerous OEM customers and markets digitalspot and R/F interventional tables under its own label. The companycontrols 70% of the bucky component and 40% of the cassette traymarkets, a company spokesperson said.

Mallinckrodt's Hesemann admitted that there is not an obviousstrategic fit between those product lines and Mallinckrodt's diagnosticimaging businesses.

"But those products do provide cost leverages on the manufacturingfloor, in the service network as well as in technological development,"he said.