Newport’s Spectramed Agrees to Be Bought by British Medical Firm

Spectramed, a Newport Beach medical equipment manufacturer with a tumultuous track record, said Thursday it has agreed to be bought by a giant British medical company for $100 million in cash.

The $12-per-share offer by London-based BOC Group represents a 140% premium over Wednesday’s closing price of $5 per share. Announcement of the deal caused Spectramed stock to soar to $11.50 per share Thursday on heavy volume of 2.2 million shares.

“It is one of the largest premiums that an acquiring company has ever paid,” said Larry Butler, vice president of Newport Securities, a Costa Mesa brokerage. “Most offers are done at 30% to 40% over stock price to entice stockholders to sell.”

Spectramed said a subsidiary of BOC will make a cash tender offer for all of Spectramed’s 8.3 million shares outstanding. The transaction is subject to approval by the Securities and Exchange Commission.

Wholly Owned Subsidiary

Spectramed, which makes devices that measure blood pressure and cardiovascular performance in critically ill hospital patients, will become a wholly owned subsidiary of BOC after the acquisition.

Spectramed’s financial performance and stock price have fluctuated widely since the company was spun off in late 1986 from Gould Inc., an Illinois conglomerate that shed its medical products group so it could concentrate on computers and electronics.

$92-Million Price

The investors who bought Spectramed for $92 million included key members of its management team and the Robert M. Bass Group of Fort Worth.

The Bass Group, known for its aggressive investments, remains Spectramed’s largest single shareholder, with 16.8% of the company’s stock.

Weighed down with debt and caught in a price war with major competitors, Spectramed sustained losses of $3 million in 1986 and $2.5 million in 1987.

In June, 1987, Spectramed raised $40 million in an initial stock offering by selling 3.6 million shares at $11 each. A few months later, following the October stock market crash, Spectramed stock was trading for as little as $1.50 a share.

With the money raised from the public offering, Spectramed reduced its long-term debt by more than half. The company also sold its cardiopulmonary division, cut operating costs and consolidated its manufacturing operations.

The company returned to profitability in the first six months of 1988, posting earnings of $2.8 million on sales of $41.6 million.

Called ‘A Good Fit’

Patricia Secrist, a BOC spokeswoman, said Spectramed is “a very good fit” for her company, a $3-billion industrial-gas and health-care firm.

One of BOC’s health-care divisions, Anaquest in Madison, Wis., is a leading supplier of anesthetic pharmaceuticals in the United States. A BOC medical equipment subsidiary, Ohmeda, is based in Murray Hill, New Jersey.

Secrist said Spectramed’s products will complement BOC’s existing patient monitoring and intravenous therapy products and help to expand BOC’s presence the U.S. market.

BOC and Spectramed officials said Spectramed’s management and operations will remain intact. Three people work at the company’s headquarters in Newport Beach. The company has a 600-worker manufacturing operation in Oxnard and a 50-worker international sales force and manufacturing plant in Singapore.

Charles A. French, Spectramed’s executive vice president and chief operating officer, said he was not surprised by BOC’s offer.

‘Undervalued in Marketplace’

“I thought the company was terribly undervalued in the marketplace,” he said.

R.J. Aplin, chairman and president of Spectramed, said BOC’s offer was unsolicited.

“We weren’t trying to sell the company at all,” Aplin said.

But the company decided to accept the offer because it appeared to be “in the best interest of our shareholders,” he said.

SPECTRAMED AT A GLANCE Spectramed, based in Newport Beach, designs, manufactures and markets products used to monitor vital functions of critical-care patients. The company has agreed to be acquired by BOC Group of London for $100 million.

Year ends Dec. 31

(in millions) 1988 1987 1986 1985 1984 6 months Revenue $41.6 $75.3 $18.8 $62.5 $50.6 Profit (loss) $2.8 ($2.5) ($3.0) $8.3 $4.3

Assets $96.4 million

Number of employees 870

Shares outstanding 8.3 million

52-week price range $11.50-$1.50

Thursday’s closing price (Nasdaq) $11.50, up $6.50

Chairman and president R.J. Aplin