American Hospital Supply Corp. said Wednesday that the previously announced sale of its Irvine-based American McGaw division to a subsidiary of Colgate-Palmolive Co. is estimated to be worth $150 million to $170 million.
Terms of the sale, scheduled to be completed by the end of November, call for the Kendall Co., headquartered in Boston, to pay $120 million in cash for American McGaw and to transfer assets of two of its own subsidiaries to American Hospital.
The sale, which comes at the prompting of federal antitrust regulators, is a major step for Baxter Travenol Laboratories Inc. in its drive to acquire Evanston, Ill.-based American Hospital.
Headquartered in Deerfield, Ill., Baxter Travenol controls an estimated 45% of the domestic market for intravenous solutions, while American McGaw accounts for another 15% of the market. Because of this, the U.S. Justice Department's antitrust division said that American Hospital would have to sell the McGaw division before the $3.8-billion acquisition could be completed.
In addition, the federal government is requiring that American Hospital sell off its Haemonatics division and a latex glove plant in Tucson, Ariz. So far, the company has found a buyer for Haemonatics and is negotiating for the sale of the glove operation, according to Les Jacobson of American Hospital.
"We have bidders and are expecting that we will have a definitive agreement and a sale by the time of the acquisition," Jacobson said, adding that both the sale of American McGaw and the merger with Baxter Travenol are to be voted on by shareholders on Nov. 22.
Although federal approval of the merger hinges on American Hospital successfully getting rid of the other two operations, Jacobson said the Justice Department may approve the merger early if American Hospital obtains firm commitments for their sale.