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Varian to Acquire Magnex Scientific, Announces Lay-offs

NEW YORK, Oct. 11 (GenomeWeb News) - Varian said today that it has signed a definitive agreement to acquire Magnex Scientific, a manufacturer of superconducting imaging magnets, for $32 million in cash and assumed net debt.

Varian also said today that it has recently laid off roughly 20 employees as part of an effort to reorganize its scientific instruments and corporate marketing organizations, and to consolidate certain scientific instruments administrative functions in North America.

 

According to the company, which announced the move in a filing with the US Securities and Exchange Commission recently, "this plan was undertaken to more closely align the strategic and operational focus of these organizations across different product lines and to improve efficiency and reduce operating costs."

 

Varian said the acquisition will include an opportunity for additional purchase price payments beyond the $32 million over the next three years, depending on Magnex achieving certain financial milestones.

 

The deal follows a five-year relationship during which Magnex supplied Varian with magnetic resonance imaging magnet systems. Varian said the acquisition of UK-based Magnex, which will operate as a subsidiary, is expected to generate external revenues of between $15 million and $18 million in the first 12 months, excluding internal magnet shipments for its own product lines.

 

Magnex currently provides about $10 million worth of products to Varian annually, the company said.

 

Varian noted that in connection with the acquisition, it plans to rationalize its field support administration in the UK, resulting in charges to earnings of about $2 million to $2.3 million. These charges will be recognized in the first and second quarters of fiscal 2005.

 

The restructuring, Varian said in its SEC filing, will result in pretax costs of between $800,000 and $1 million, which are anticipated to be recorded primarily in the fourth quarter of fiscal year 2004. The remainder will be recorded in the first quarter of fiscal 2005.

 

A Varian spokeswoman told GenomeWeb News that the company currently employs almost 4,500.