A Medical Device Daily

Cantel Medical (Little Falls, New Jersey) reported that it entered into an asset purchase agreement with Olympus (Tokyo) on May 16 that replaces the previously disclosed July 2005 agreement among Olympus, Cantel and Cantel's Carsen subsidiary.

The purchase agreement incorporates all of the material terms of the 2005 agreement but was expanded to include the sale to Olympus of additional assets of Carsen and a $10 million fixed payment to Carsen, representing a $4 million increase over the $6 million fixed payment in the 2005 agreement.

Olympus will now be purchasing substantially all of Carsen's assets other than those related to its Medivators business and certain other smaller product lines. Olympus also will pay Carsen significant additional consideration over and above the $10 million fixed payment for certain of the acquired assets such as inventory, accounts receivable and unfilled customer orders.

In addition, Olympus will be hiring substantially all of Carsen's employees and take over Carsen's facilities, which will result in a reduction in previously anticipated severance and other wind-down costs. The transaction will close on July 31.

In addition, on July 31, Carsen will sell most of its remaining inventory, records and other assets to a newly formed corporation owned by two individuals who currently serve as executives of Carsen. The purchase price will be the book value of the acquired assets, which is anticipated to be less than $100,000

Beginning on Aug. 1, the company's Minntech (Minneapolis) subsidiary will sell its Medivators products in Canada (currently distributed through Carsen) through the new company, which will be independent of Carsen and Cantel.

The two executives, William Vella, the president and CEO of Carsen, and Paul Heck, vice president-finance and controller of Carsen, will be resigning their positions with Carsen on July 31.

Net proceeds (after income taxes) from the termination of Carsen's operations are currently projected to be about $21 million.

Cantel Medical is a provider of infection prevention and control products in the healthcare market. Its products include specialized medical device reprocessing systems for renal dialysis and endoscopy, dialysate concentrates and other dialysis supplies, disposable infection control products primarily for the dental industry, endoscopy and surgical products, water purification equipment, sterilants, disinfectants and cleaners, hollow fiber membrane filtration and separation products for medical and non-medical applications, and specialty packaging for infectious and biological specimens.

In other dealmaking news:

• Source Medical Solutions (Birmingham, Alabama) a provider of outpatient information management solutions, reported that it has acquired Prescient Healthcare Systems (Branford, Connecticut), a provider of business process solutions for ambulatory surgery centers (ASCs).

“The combination of Source Medical's market leadership and Prescient's product responsiveness culminates an eighteen-month process that has focused all of Source Medical's resources on meeting the challenges of the rapidly growing outpatient market,” said George McTavish, CEO of Source Medical.

“One of the factors we considered carefully prior to agreeing to the acquisition was the extensive changes made at Source Medical over the past 18 months. We were watching the new team at Source Medical carefully and were very excited about the potential of a combined organization,” said Scott Palmer, CEO of Prescient.

Beginning in 4Q04, Source Medical built a new senior management team and complemented its middle management ranks with extensive staff additions and promotions.

Recently, Source finalized a round of private equity financing as well as a new credit facility to enable the company to execute its business strategy and further support its customers. This week, Source Medical retired its remaining indebtedness to HealthSouth (also Birmingham), which initially funded the company's growth.

McTavish said Prescient founder Palmer, Professional Services Director Ron Pelletier, Director of Development Tim Spencer and the rest of the Prescient team, will join Source Medical. He also noted that the company will maintain Prescient's offices in Branford.

Source Medical provides outpatient information solutions and services for ambulatory surgery centers, rehabilitation clinics and diagnostic imaging centers nationwide.

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