A Medical Device Daily

In order to combine forces on expanding computer assisted detection (CAD) technology, software maker Merge Healthcare (Milwaukee) and Confirma (Seattle) have entered into a definitive agreement for Merge to acquire Confirma in an all-stock transaction.

Confirma develops software to help physicians identify potential breast and prostrate tumors from MRI tests.

This acquisition brings Confirma's technologies to Merge's multiple market channels and international markets, and provides a mechanism to expand adoption of this important technology.

The all-stock transaction will be based on a 10-day volume weighted average price (VWAP) of Merge Healthcare's common stock, as of the third trading day prior to the closing date and is subject to certain adjustments. The total value of the transaction is estimated to be $22 million, or about 5.6 million shares of Merge Healthcare common stock using a 10-day VWAP as of the close of market on Aug. 6, of $3.897.

Based on these amounts, it is estimated that Confirma investors will own about 8.5% of Merge post-acquisition. Merge expects the transaction to be completed in September.

"CAD technology is still at an early adoption phase in the market for most indications, but it has significant opportunity as a tool for reducing imaging costs in today's healthcare reform environment," said Justin Dearborn, Merge Healthcare CEO. "Together with Confirma, we believe we can now better realize the long term global potential for this technology."

Confirma has spent years developing the extensive CAD algorithms, intellectual property and validation required of these highly technical clinical tools. The flagship product, CADstream, has more than 1,200 systems implemented for breast and prostate MRI, and several additional solutions are in development. "Our customers understand the core benefits of CAD as a clinical workflow tool," said Wayne Wager, CEO of Confirma. "By combining our patented CAD applications with Merge's broader health IT solutions and global presence, we can better take advantage of current and future growth opportunities and, thus, extend our solutions to more clinicians."

In other dealmaking news, Life Technologies (Carlsbad, California) reported that it has completed the sale of its SQL*LIMS business to LabVantage Solutions (Bridgewater, New Jersey) for an undisclosed amount.

The SQL*LIMS business is an enterprise laboratory information management system (LIMS) provider that manages the laboratory process life cycle. As previously announced, Life Technologies does not expect this transaction to have a material affect on its financials in fiscal year 2009.