$40-Million Deal : Bergen Brunswig Medical Supplies Unit to Be Sold

Dissatisfied with the unit’s status as fourth-largest player in the nation’s hotly competitive medical supplies industry, Bergen Brunswig said Monday that it will sell its medical supply subsidiary to a private investment group for about $40 million cash.

The investors include most of the subsidiary’s top management.

Bergen Brunswig officials said they are selling Bergen Brunswig Medical Supply, which distributes needles, syringes and other medical and surgical supplies, to focus more resources on expanding the parent company’s much larger drug distribution business. Both companies are headquartered in Orange.

The transaction, expected to close in January, was put together by Bankers Trust Co. of New York, which is structuring the deal as a leveraged buyout.

Expansion Discussed

The private investor group is led by Polyvios Vintiadis, a New York investor who will serve as chairman of the new company. The sale still must be approved by federal regulators and Bergen Brunswig debenture holders.

In its last fiscal year, Bergen Brunswig Medical Supply accounted for $247 million of Bergen Brunswig’s $3.4 billion in annual sales and for $2 million of the company’s $15.9 million in net earnings. The company distributes medical and surgical supplies to hospitals and other health providers.

Although Bergen Brunswig officials said they have not yet decided how to spend the proceeds from the medical supply subsidiary’s sale, John McRae, a specialist in medical companies with Bear, Stearns & Co., said he expects that it will be used to acquire additional drug companies.

In a series of six acquisitions that concluded about 18 months ago, the corporation boosted its annual revenue by about 50%.

Meanwhile, the purchasers of Bergen Brunswig Medical Supply said Monday that they also will be expanding. Paul Jordan, president of the subsidiary, said Bankers Trust Co. has agreed to provide expansion funds and that he expects acquisitions to begin soon after the deal closes.

Jordan, 51, said the New York investment group that is leading the acquisition of the subsidiary has no expertise in the medical business and has decided to retain the entire management staff of the subsidiary, including Jordan and five vice presidents. He said management also has received a small equity interest in the new firm, the exact amount of which he would not disclose.

Jordan said there will be no layoffs at the medical supply subsidiary, which employs 350 nationwide, including a staff of 60 in Orange. He said up to 30 workers will be added to the administrative staff when it separates from Bergen Brunswig. He said, a new name will have been found for the company as well as a new headquarters in Orange County.