Hycor Biomedical Inc., a developer and manufacturer of medical diagnostic products, said Wednesday that it is negotiating the purchase of a similar company in Portland, Me., that would more than double its annual sales from $10.6 million to $25.5 million.
Hycor said it has agreed in principle to acquire Ventrex Laboratories Inc. for 2.4 million shares of its stock, worth about $12 million, and warrants to purchase an additional 500,000 Hycor common shares.
He said the combined companies would be based at Hycor's Garden Grove headquarters.
"We believe there are great synergies and economies of scale to be gained by combining the companies," said Reg Jones, Hycor's senior vice president and chief financial officer. He noted that the acquisition would also give Hycor some new products, including allergy testing kits, to add to its line of blood and urine diagnostic tests.
In their latest fiscal years, Hycor posted earnings of $944,000 on sales of $10.6 million, while Ventrex reported a loss of $155,000 on sales of $14.9 million.
Robert Rice, president of Prime Discount Securities Inc., a market maker in Ventrex's stock, blamed the company's loss last year on the necessity for the company to absorb the costs of an acquisition.