Mindray acquires Datascope's patient monitoring business

14 March 2008

Chinese company Mindray Medical International Limited (NYSE: MR) is to take over Datascope Corp's (Nasdaq: DSCP) patient monitoring business for US$240 million in a move that will combine its manufacturing facilities and markets in China with an established presence in the US and Europe.

Datascope will receive $202 million in cash at the closing and will retain approximately $38 million of receivables generated by the patient monitoring business.

Datascope says that it believes that its planned earnings for fiscal 2009 will be essentially unaffected by the sale of the patient monitoring business, before reflecting any benefits from the receipt and application of the net proceeds from the sale.

The acquisition will double Mindray's sales. Datascope's patient monitoring business achieved total revenues of US$161.3 million in calendar year 2007, approximately the same revenues generated from Mindray's home China market. The move will create the third-largest player in the global patient-monitoring device industry.

Mindray says the takeover will combine its strong China-based engineering and production platforms with Datascope's established brands, long standing reputation for high-quality products and service, its large and established direct sales and service team in the United States and Europe and both companies' leading R&D capabilities.

"This transaction represents a unique combination of strengths that will help transform Mindray from a largely China-based company into a global leader, and substantially further our strategy of building a leading on-the-ground presence in the United States and Europe," said Mr. Xu Hang, Mindray's chairman and co-chief executive officer.

"Datascope customers should also benefit from the combined company's expanded product lineup and enhanced ability to tailor product functionality for specific end-user requirements, and Mindray's customers in the United States and Europe will enjoy the support of an established direct sales and service network."

The company says it will maintain Datascope's existing branded product lines and to continue manufacturing Datascope products in the United States. David Gibson, Datascope's vice president and president, patient monitoring division and technology services division, will serve as the president of Mindray's Datascope patient monitoring business unit upon completion of the transaction. The existing management team is expected to continue post-closing without significant changes along with the rest of the patient monitoring division staff.

Currently, the majority of Datascope's patient monitoring revenue is generated from sales in North America, with the remainder from markets largely in Europe.

Mr Li Xiting, Mindray's president and co-chief executive officer commented, "This is an exceptional fit of complementary assets in the patient monitoring industry. Datascope's strength in direct sales to under-300 bed hospitals, its leading market share in key niche areas, and direct sales and service team in the United States and Europe offer immediate cross-selling opportunities for Mindray's high performance-to-price medical imaging systems. Also, by leveraging Mindray's China-based R&D, we are positioned to tailor existing Datascope models for new markets and enhance product functionality. With our common culture of performance and dedication to meeting customer needs, I am very optimistic for the future of the combined business."

Mr Li noted that the combined company will enjoy leading market share in specific sub-segments of the US patient monitoring market, such as ambulatory surgery centres, the hospital anaesthesia market and the vital signs monitoring market, as well as significant strength in centralised monitoring systems.

The combined business will have approximately 4,100 employees and offer over 50 products across Mindray's three product segments.

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