Buying magnets

Palo Alto, CA-based Varian is to acquire the Oxford firm of Magnex Scientific Limited for $32 million in cash and in the process will ‘rationalise’ its field support administration in the UK.

Varian is to acquire the Oxford, UK firm of Magnex Scientific Limited for $32 million in cash and assumed net debt, subject to certain net asset adjustments.

The transaction will also include an opportunity for additional purchase price payments over three years, depending on performance relative to certain financial targets.

Magnex, a designer and manufacturer of magnetic resonance (MR) imaging magnets, is also a major supplier of vertical high-resolution nuclear magnetic resonance (NMR) magnets, superconducting magnets for Fourier Transform mass spectroscopy (FTMS), and MR microscopy gradients.

Magnex currently provides Varian with about $10 million worth of product annually, mainly MR imaging magnets.

Varian expects the acquisition to generate external revenues of $15 million to $18 million in the first twelve months, excluding internal magnet shipments for its existing NMR and MR imaging product lines. It also expects the acquisition to have a relatively neutral impact on earnings for the first six months and to be accretive thereafter.

Varian says that it plans to ‘rationalise’ its field support administration in the UK in a move that is expected to result in charges to earnings totalling approximately $2.0 million to $2.3 million, which will be charged in the first and second quarters of fiscal year 2005.

Once bought, Magnex will be operated as a wholly owned subsidiary of Varian.

Varian will continue its long-time partnership with Oxford Instruments Superconductivity, which supplies high-resolution magnets for Varian’s NMR spectrometer systems, and Magnex will continue to offer its complete range of MR imaging, NMR, and FTMS magnets to its existing customer base.

The closing of the acquisition is subject to regulatory approval, and is expected to close within 30 days.