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Beckman to Buy Miami Firm for $1.15 Billion

Health care: Combined company would be a leader in manufacturing medical diagnostic equipment.


In a $1.15-billion melding of two major medical diagnostic equipment makers, Fullerton-based Beckman Instruments Inc. said Tuesday it has agreed to purchase privately owned Coulter Corp. of Miami to create a formidable force in a highly competitive market.

The combined companies, to be called Beckman Coulter Inc., would manufacture instruments that can perform almost all of the routine blood analysis and diagnostic tests done in medical laboratories around the world.

Beckman Coulter would have almost $2 billion in annual sales, making it the fifth-largest player in the $19-billion market and giving it considerable clout in negotiating with hospital chains.

The purchase--Beckman's first significant acquisition since it was spun off from the old SmithKline Beckman Inc. in 1988--is the latest of a string of acquisitions in the medical instruments industry.

The moves are aimed at cutting costs amid growing competition to supply testing equipment to hospitals and laboratories.

"The customers are consolidating and the suppliers are consolidating," said Robert Dunne, an industry analyst with Wasserstein Perella Securities in New York. "The only question was whether Beckman would be a consolidator or would be consolidated."

Dunne and other analysts said one big plus in the deal is that the companies do not make competing equipment, so the new company would not have to eliminate product lines or many of its 11,000 jobs.

On the down side, however, Beckman is taking on a huge debt of $1.3 billion to finance the deal and is planning on selling a variety of still-undisclosed real estate assets to reduce the debt. Until that happens, however, the company's bonds are likely to be considered risky.

Beckman officials said the company will pay $875 million in cash and assume $175 million in debt and $100 million in "extraordinary obligations" related to a change-of-control benefit plan at Coulter.

Beckman said that it will take a fourth-quarter charge of about $300 million, or about $10 per share, and that it expects 1998 earnings to be depressed by as much as $2 per share because of the acquisition. The company posted a 1996 profit of $74.7 million, or $2.58 a share.

Beckman shares dropped 44 cents to close at $46.63 on the New York Stock Exchange.

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