By Frances Bishopp
Hospital products supplier Mallinckrodt Inc. has acquired Nellcor Puritan Bennett Inc., a global provider of products for respiratory ailments, for $1.9 billion, giving both companies increased critical mass in the marketplace as well as adding Nellcor's line of medical devices to Mallinckrodt's inventory.
The deal creates a company that will have combined annual revenues of $2.4 billion, Peter Faur, director of corporate communications at Mallinckrodt, told BioWorld Today.
Critical mass is important, Faur said, in order to compete more efficiently in the area of group purchasing. Hospitals want to work with fewer suppliers who can give them more products, Faur said. "You have to be big enough to be a serious force in the health care industry," Faur said.
Nellcor, of Pleasanton, Calif., will receive $28.50 a share, which represents a 36 percent premium on its $20.94-per-share closing price on July 23, 1997.
Mallinckrodt financed the merger through the sale of its animal health business to Schering-Plough Corp., of Madison, N.J., for $405 million and its Tastemaker joint venture to Roche Holding Ltd., of Basel Switzerland, for $550 million. Also, Mallinckrodt borrowed $1.6 billion from J.P. Morgan & Co., Goldman Sachs & Co. and Citibank, all of New York.
Mallinckrodt, of St. Louis, was founded in 1867 as the first chemical company west of Philadelphia. This new merger will create one of the world's 15 largest medical device companies.
Mallinckrodt has collaborations with: Molecular Biosystems Inc., of San Diego, for marketing of Albunex and FSO69, imaging agents for ultrasound examinations of the heart; Immunomedics Inc., of Morris Plains, N.J., for CEA-Scan for detection of colorectal cancer; Advanced Magnetics Inc., of Cambridge, Mass., for GastroMark, a contrast agent for use with magnetic resonance imaging of the gastrointestinal tract; and Metasyn Inc. (renamed Epix Medical Inc.), of Cambridge, Mass., for MS-325, an injectable magnetic resonance imaging agent for cardiovascular indications. *