Medasys, Citation call off plans to combine businesses

Medasys, Citation call off plans to combine businesses

Firms will likely sell each other's products, however

The merger of French PACS vendor Medasys Digital Systems and Citation Computer Systems fell apart earlier this month. Regulatory hurdles in the U.S. and France, as well as declines in both companies' stock valuations, led to the breakdown, according to Robert Copper, chairman and CEO of St. Louis-based radiology and laboratory information systems vendor Citation.

"I don't know if the shareholders of both companies didn't like the deal, which may have been the reason the stocks fell," Copper told PNN. "I know in our case, there were some (shareholders) looking for a cash buyout, and, when that didn't happen, they sold, which drove the stock down."

The firms originally intended to undertake a simple cash-based merger, but this would have resulted in negative tax implications for the French shareholders of Medasys, Copper said. As a result, a more complex transaction involving an exchange of stock shares had to be created. The need to file necessary documentation in both countries, provide proxy statements to shareholders, and meet other procedural requirements dragged the merger process out, however.

"It would have taken another four to six months to get it done," he said. "That (would have been) over a year since we started talking, and that is just too long."

Medasys CEO Jean-Marie Lucani was not available for comment at press time to discuss his company's current plans.

There was sound logic in the idea of combining Citation's medical information systems products with the Medasys PACS line, Copper said. This logic remains, and the two companies are exploring ways to jointly market their products, although integration of the lines will be limited by the continued existence of separate management and ownership, he said.

A possibility remains that the merger could be tried again, he said, although the two companies' stock prices would have to rise sufficiently to make the deal economical for both sides. While details of a joint marketing agreement have not been worked out as yet, this cooperation should involve the continued sale of both product lines by both companies, Copper said.

"We will continue to market our products and this idea of an electronic patient record," he said. "They will do the same both here and in France. (Medasys) will sell our products if they need laboratory or radiology information systems and we will sell their products for PACS and general imaging. We will share revenues."

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