Elscint, an Israel-based maker of big-ticket diagnostic imaging systems, has become a casualty of the cutthroat market for capital medical equipment.
A subsidiary of Elbit Medical Imaging, Elscint recently agreed in principle to sell its major product lines for $375 million to Picker International and General Electric Co. (Sept. 21, p. 14).
"Elscint could not survive or make a substantial profit without acquisitions or merging with one of the big companies," Gabi Yankovitz, Elscint's chief financial officer, said late last month in a telephone interview from Haifa, Israel. "There will be no more selling as Elscint in the United States."
Elscint's departure means one less competitor vying for hospitals' business and a tighter grip on the diagnostic imaging equipment market by a handful of mega-suppliers.
Although never a diagnostics products giant, Elscint was widely regarded as a crafty niche-player compared with major suppliers Picker, GE, Siemens and Toshiba.
For the six months ended June 30, Elscint reported an operating profit of $3.4 million on revenues of $163 million compared with net income of $4.2 million on revenues of $147.4 million in the year-ago period. By comparison, GE's annual medical division revenues exceed $4 billion.
In the larger of the two transactions, Cleveland-based Picker agreed to buy Elscint's computed tomography division for about $275 million.
"When this acquisition is finalized, Picker will dramatically increase its CT presence in several strategic global markets-literally overnight," said Cary Nolan, Picker's president and chief executive officer.
Picker is a subsidiary of the General Electric Company of the U.K., which is unrelated to the U.S. company.
In the second deal, Fairfield, Conn.-based GE agreed to buy Elscint's nuclear medicine and magnetic resonance imaging businesses for about $100 million.
After the transactions are completed, Elscint will continue primarily as a contract developer and supplier of subassemblies to GE and Picker. Elscint will also continue to operate a modest mammography business outside the U.S.
Both transactions are subject to definitive agreements and standard regulatory approvals. They are expected to close by November.