Agreement puts Star on solid footing after GE cutoffImaging component supplier Star Technologies has found a corporatemerger partner in a deal that should give the Sterling, VA, companya solid stream of revenue while it builds market acceptance
Imaging component supplier Star Technologies has found a corporatemerger partner in a deal that should give the Sterling, VA, companya solid stream of revenue while it builds market acceptance fora new line of products. Star has been on the rebound since a CTcomponent supply deal with GE broke down last year.
Star announced last month that it will merge with ElectronicInstrumentation and Technology (EIT), an electronics firm thatis also based in Sterling. EIT will become a division of Staron completion of the deal, which still requires shareholder approval.EIT's management team will remain intact, including presidentand founder Joe May, who will receive an equity position in Starand will become president of Star's EIT division, according toBrenda Potosnak, Star controller and CFO.
The deal appears to put the final pieces in place for Star'srebuilding program. Earlier in the month, GE paid Star $9.4 millionto settle Star's breach-of-contract claim against the Milwaukeevendor (SCAN 8/28/96).
Star claims that the breakdown of the GE relationship cost thecompany 90% of its revenues. Star reported revenues of $21.6 millionin fiscal 1995 (end-March). The GE cutoff caused the company'srevenues to plunge to $4.3 million for the same period in fiscal1996.
Merging with EIT gives Star access to that company's revenuestream of $20 million a year. EIT has been profitable for mostof the years it has been in business, Potosnak said. Financialterms of the deal were not disclosed, but Star will pay for theacquisition at least in part with proceeds from the settlementwith GE.
Like Star, much of EIT's product line consists of componentssold to OEMs. EIT manufactures electronic instrumentation andtechnology products for medicine, industrial control, computers,and communications, according to May. About 20% of the company'srevenues come from medical products, and its OEMs include SterlingDiagnostic Imaging, Du Pont, AT&T, and Dade Medical.