A Medical Device Daily

The $5.3 billion acquisition of Bayer Diagnostics (Tarrytown, New York) by Siemens Medical Solutions (Malvern, Pennsylvania) has been completed. The deal was first disclosed in July (Medical Device Daily, July 5, 2006).

Bayer Diagnostics and Diagnostic Products Corp. (DPC; Los Angeles) were merged into a single business unit on Jan. 1. The new entity, Siemens Medical Solutions Diagnostics, is now a wholly owned subsidiary of Siemens and employs more than 8,000.

For Siemens, the acquisition provides a strong complementary fit to its purchase, in April, of DPC for $1.68 billion (MDD, April 28, 2006). The company said that with the additions of DPC and the Bayer unit it will garner the No. 2 position in immunodiagnostics worldwide.

In unveiling its part of the deal, parent company Bayer (Leverkusen, Germany) said the spin-off is intended to reduce debt and refocus its health division.

“We are concentrating on pharmaceuticals for both humans and animals, and products that can be promoted directly to patients,” said Bayer CEO Werner Wenning at the time the deal was disclosed in July. The company noted that its diabetes business, as well as the contrast agent business of Schering (Berlin), were not included in the Siemens transaction. Bayer acquired Schering for about EUR 3.7 billion this past June (MDD, June 15, 2006)

“With the acquisitions of DPC and Bayer Diagnostics, we invested heavily in a future oriented and growing market in the healthcare sector. We see tremendous potential for Siemens Medical Solutions Diagnostics and have high expectations for the new unit,” said Klaus Kleinfeld, CEO of Siemens (Munich, Germany).

Siemens Medical Solutions Diagnostics maintains leading positions in clinical chemistry, patient tests, laboratory automation and blood cell diagnostics and develops solutions for the molecular diagnostics and gene analysis markets.

Anthony Bihl, previous president of the Diagnostics division of Bayer Healthcare, has been named as CEO. Sid Aroesty, who served as president and COO of DPC, was nominated COO of the new business; and Jochen Schmitz, previous CFO of the Siemens Medical Solutions Molecular Imaging division, will assume the CFO role.

In other dealmaking activity:

• Arrhythmia Research Technology (ART) reported that its subsidiary, Micron Products (both Fitchburg, Massachusetts) — a manufacturer of silver/silver chloride and conductive resin sensors used in disposable ECG, EKG and EEG monitoring and diagnostic electrodes — completed the purchase of Leominster Tool Company (Leominster, Massachusetts).

“The addition of the new Leominster Tool division vertically integrates mold design and manufacturing with Micron’s proprietary sensor product line, with the custom injection molding of our New England Molders [NEM] division and the product life cycle management of our Micron Integrated Technologies [MIT] division,” said James Rouse, president/CEO of ART and Micron. He said the Leominster Tool division will function independently as a high-end mold design and manufacturing provider for the injection molding industry.

Micron’s new Leominster Tool Division said it will employ all of the Leominster Tool management and staff.

• Xcorporeal (Los Angeles), a developer of congestive heart failure treatment products, a wearable artificial kidney and other medical devices, reported that its merger agreement dated Sept. 1, 2006, with National Quality Care (NQC; Beverley Hills, California) has been terminated.

Xcorporeal said the agreement provided a provision “For the avoidance of doubt, notwithstanding any other provision of this agreement, under no circumstances, other than as caused by its own uncured breach, will [Xcorporeal] have any obligation to issue or deliver any [Xcorporeal] shares after Dec. 31, 2006, unless the parties mutually agree to extend such date.” The parties did not mutually agree to extend such date, and Xcorporea said it has no obligation to issue or deliver any shares of common stock to consummate a transaction with NQC. On Dec. 29, NQC served Xcorporeal with notice that it was terminating the agreement.

It said that the license agreement with NQC dated Sept. 1, 2006, will, however, remain in full effect.

• Renal Advantage (Brentwood, Tennessee), which says it is the fourth largest provider of dialysis services in the U.S., said it completed its previously reported acquisition of RenaLab (Jackson, Mississippi) from Fresenius Medical Care North America (FMCNA). Terms of the were not disclosed.

Currently, RenaLab employs 94 individuals and is projected to perform 2.4 million lab procedures in 2007.

In May 2006, when Renal Advantage signed an agreement to manage and ultimately acquire RenaLab (MDD, May 5, 2006) substantially all of the employees of RenaLab joined Renal Advantage, and RenaLab began providing services to Renal Advantage’s then 73 facilities.

• Pacer Health (Miami), owner/operator of acute care hospitals, medical treatment centers and psychiatric care facilities, reported that it has finalized its lease agreement of Knox County Hospital (Barbourville, Kentucky), a non-urban healthcare facility, which Pacer Health has managed and operated since March 24, 2006.

Effective Dec. 31, Pacer Health took over operations of the facility and is leasing the property for a 30-year term with an option to purchase.

Knox County is a 42-bed facility that offers a suite of healthcare services.