A Medical Device Daily

Elekta (Stockholm, Sweden) and Impac Medical Systems (Mountain View, California) reported that Elekta would acquire Impac, a provider of information systems for managing radiation and medical oncology and related clinical practices.

Elekta will pay $24 in cash for each share of Impac common stock outstanding, a premium of 22% over the Impac closing price on Jan. 14, equating to a diluted equity value of about $250 million and an enterprise value of about $190 million.

Elekta said the acquisition will make it a leading supplier of advanced solutions for high-precision radiation treatment of cancer and for non- or minimally invasive treatment of brain disorders, with products for clinical, administrative, outcomes and decision support purposes.

The merged firm, the companies said, “will offer a fully-integrated, seamless solution addressing the spectrum of cancer care, from diagnosis through treatment planning, treatment delivery and follow-up.“ And it will provide “more rapid deployment of Impac's solutions into Europe and Asia/Pacific, while providing Impac's U.S. customers with greater choice and improved radiation therapy solutions.“

Combined, Elekta and Impac will have, they said, relations with more than 3,000 hospitals and cancer centers worldwide, including in excess of 1,300 oncology centers, more than 1,100 cancer registry operations and 400-plus pathology laboratories in North America.

Dr. Laurent Leksell, president and CEO of Elekta, said, “The addition of Impac's strong management and software engineering team creates a significant new dimension to our solutions for cancer treatment.“

Impac will operate as an Elekta subsidiary under the direction of Joseph Jachinowski, its current president and CEO, who will continue as president of Impac and as a member of Elekta's management team.

The merger requires approval by Impac stockholders, Hart-Scott-Rodino clearance and other customary conditions. Impac stockholders holding about 33% of the company's shares have agreed to vote their shares in favor of the transaction.

Elekta and Impac, with a long history of collaborations, will work as separate entities but “in close cooperation. Integration will take place gradually where it benefits the customers and makes operations more efficient,“ Elekta said.

Elekta expects the transaction to result in immediate accretion to earnings on a cash basis; dilution to reported earnings in FY05/06; and accretion in FY06/07 and onward; accelerated revenue growth and financial flexibility. It estimates in the short- to medium-term that the combined entity will achieve SEK 30 million in cost reductions.

Elekta had revenue of SEK 2.9 million in FY03/04. Excluding the effects of non-cash amortization, the transaction is expected to be accretive to Elekta's after-tax earnings by about SEK 2 a share in 2005/06.

The acquisition will be financed through existing cash and a new $125 million, five-year revolving credit facility provided by Banc of America Securities, Danske Bank A/S and SEB Merchant Banking.

Accuray (Sunnyvale, California), a leader in image-guided, full-body radiosurgery, has completed the purchase of certain assets of the High Energy Systems Division of American Science and Engineering (Billerica, Massachusetts), giving Accuray exclusive rights to manufacture and sell X-band linear accelerators for medical applications. Accuray now has control over the production of the X-band linear accelerator systems, a sub-system of the company's CyberKnife Stereotactic Radiosurgery System and used to produce the radiation beam that destroys cancer cells.

“With this transaction, Accuray . . . enters a new phase of growth,“ said Chris Raanes, chief operating officer. “Bringing this production capability in-house will lower our cost of doing business and allows us to optimize product performance.“

Euan Thomson, Accuray's president and CEO, said, “Accuray has proven the efficacy of full-body radiosurgery, and with this purchase we gain exclusive access to the technological expertise that will enable us to create new features and maintain our position at the forefront of this exciting new field.“

The CyberKnife Stereotactic Radiosurgery System is a non-invasive, frameless image-guided radiosurgery system that ablates tumors and other lesions anywhere in the body without invasive surgery. The CyberKnife treats in single or staged (two to five) sessions, monitoring internal reference points (skeletal landmarks or small implanted markers) to correct for patient movement during treatment. It delivers multiple beams of targeted radiation that converge upon the tumor while minimizing injury to healthy tissue.

The CyberKnife is FDA 510(k)-cleared and has the CE mark to treat anywhere in the body when radiation treatment is indicated. The CyberKnife System has been used to treat more than 10,000 patients, according to Accuray.

In other dealmaking activity:

• Invacare (Elyria, Ohio) reported acquiring Australian Healthcare Equipment (AHE; Sydney/Melbourne, Australia), a manufacturer of beds, related furniture and pressure care products for home care and non-acute institutional care. Terms of the cash purchase were not disclosed.

AHE markets three Australian brands: Murphy Healthcare Furniture, Hendicare and Bosshard Medical. AHE will operate independently under its existing management, focusing on growing its traditional core business.

“We are pleased to have AHE join Invacare and strengthen our Australian position with its product offerings and market presence,“ said A. Malachi Mixon, III, chairman and CEO of Invacare, a global leader in the manufacture of home and long-term care medical products.

Merge Technologies (dba Merge eFilm; Milwaukee), a healthcare software company, and Cedara Software (Toronto), a medical software developer, have agreed to an all-stock merger. Merge eFilm will issue either 0.587 Merge eFilm common shares, or 0.587 shares of a newly created class of Canadian exchangeable shares for each Cedara common share.

Based on the 20-day volume average price of Merge eFilm stock for the period ended Jan. 14, the transaction is valued at $12.37 (about C$15.10) for each common share of Cedara, a 17.5% premium to Cedara's 20-day volume-weighted average price.

The combined company will offer image and information management solutions to the diagnostic OEM and end-user radiology and clinical specialties, producing estimated annual revenue of more than $100 million (C$122 million).

Abe Schwartz, Cedara's president and CEO, said, “Our significant expansion of leadership, talent and operational resources will allow us to enter new clinical markets and create product offerings beyond radiology. Our employees will have greater professional growth and career path development, and our shareholders will gain from the financial strength of the combined organization.“

The combined company will have corporate headquarters in Milwaukee. Richard Linden will serve as its president and CEO; Schwartz will continue his involvement with the company, including serving as a member of its board.

The transaction is expected to be accretive to Merge eFilm's EPS in 2005 (excluding the impact of one-time transaction-related expenses) and beyond.

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