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PerkinElmer Sells Medical Imaging Business for $276M

This article has been corrected to reflect the correct acquisition amount.

NEW YORK (GenomeWeb) – PerkinElmer has sold its medical imaging business to Varian Medical Systems for $276 million, the company said in a filing with the US Securities and Exchange Commission today.

Varian has agreed to purchase all outstanding equity interests in PerkinElmer subsidiaries PerkinElmer Medical Holdings and Dexela Limited, along with certain other assets relating to PerkinElmer's business of designing, manufacturing, and marketing flat panel x-ray detectors, and related software and accessories.

Varian will finance the transaction through a debt financing, PerkinElmer's filing noted. The deal is expected to close in the first half of 2017, but no earlier than April. The agreement also states that if Varian terminates the deal, it will be required to pay PerkinElmer a termination fee of up to $22.1 million.

"Combining our medical imaging business with Varian's capabilities will better position the business to support its customers and continue to innovate and develop new imaging systems," said PerkinElmer Chairman and CEO Robert Friel in a statement. "In addition, the divestiture will allow PerkinElmer to focus our investments and accelerate growth in higher priority areas."

In a note to investors, Cowen analyst Doug Schenkel said the sale was "highly anticipated." Removing the business from his full-year 2017 forecast is roughly $.20 per share dilutive to 2017 EPS forecasts, he added, but will likely only be $.05 dilutive if the proceeds are used to buy back stock shares.

Evercore ISI analysts Ross Muken and Vijay Kumar noted that the sale was "not a major surprise as the cyclical business has been a drag on PerkinElmer's environmental health segment for several quarters and it was not a core or particularly synergistic business."

The sale of the business will likely work out positively for PerkinElmer as getting rid of medical imaging will allow the company to better align its product portfolio to the customer base of its environmental end market, they added. And although the deal is slightly dilutive, "this is expected and we feel a reasonable price received for a declining business," they wrote.

Muken and Kumar also said they expect the proceeds to be used for growth M&A deals or for a near-term share buyback to offset the dilution.

PerkinElmer's shares were fairly flat at $53.11 in morning trading on the New York Stock Exchange.