A Medical Device Daily

Jabil Circuit (St. Petersburg, Florida) reported its intention to acquire the business and assets of Varian Electronics Manufacturing (VEM), the manufacturing business of Varian (Palo Alto, California), for $195 million in cash.

The VEM business derives 85% of its revenues from external customers in the medical, communications, industrial and aerospace industries.

“This acquisition expands our commitment and delivers on our promise to provide the market-leading solution to customers in these highly specialized and rapidly growing markets,“ said Timothy Main, president and CEO of Jabil. “Customer requirements in these markets are truly unique and this acquisition will give us greater depth and competency to serve customers and expand our business in these sectors.“

VEM primarily serves high-mix, high-complexity manufacturing markets. Three sites, a 200,000-square-foot operation in Tempe, Arizona, and two small leased sites in Poway and Rocklin, California, provide services for products including patient monitoring, digital X-ray, infusion pumps, intelligent transportation, scientific instruments, telephony, satellite modems, avionics instrumentation, flight electronics, simulators and radar equipment.

Completion of the transaction, which is subject to regulatory clearance and customary conditions, is expected to take place in early March. The purchase price is subject to certain working capital adjustments. Jabil said the transaction would be accretive to earnings during fiscal 2005 and that management would provide specific guidance during its second-quarter earnings announcement on March 17.

Jabil provides comprehensive electronics design and product management services to global electronics and technology companies.

In conjunction with the deal, Varian reported that its board of directors has authorized the company to repurchase up to $145 million of its common stock. These repurchases are expected to be made in the next 12 months, but are authorized to be made until Sept. 30, 2006.

The repurchase program is contingent upon completion of the company's divestiture of the VEM business to Jabil.

This program, once effective, will replace a previous authorization to repurchase up to 1 million shares, of which 808,000 shares remained available for repurchase as of Dec. 31, 2004.