Birtcher Agrees to $44-Million Merger Deal

Aiming to bolster its position in the competitive market for less-invasive medical devices, Birtcher Medical Systems Inc. said Monday that it will merge with Solos Endoscopy Inc., a 19-month-old company based in Duluth, Ga.

If shareholders approve the deal, which is valued at $44 million, the expanded Birtcher would have more than $50 million in annual sales. It would also offer a full line of instruments and video monitoring devices for endoscopic surgery, which is performed with tiny instruments inserted inside the human body, Birtcher President William E. Maya said.

Birtcher stock leaped $1.25 on the news to close at $18.75 per share.

If Birtcher shareholders approve the merger at their Dec. 12 meeting, Solos shareholders will receive 2.3 million shares of Birtcher stock, which is traded on the NASDAQ exchange, Maya said. Solos is privately held, but the owners of 90% of its shares have already agreed to the deal, as have holders of more than 30% of Birtcher stock, the companies said.

Irvine-based Birtcher, which earned $1.6 million on fiscal-1991 sales of $31 million, manufactures electrosurgical devices. It received FDA approval last month to market its Argon Beam Coagulator for use in laparoscopic procedures, in which surgery is performed through a small abdominal incision and doctors view their work through a tiny video camera inserted inside the abdomen.

Solos sells such video cameras, monitors and video recorders, as well as devices called trocars through which the instruments are fed inside the abdomen and other accessories for minimally invasive surgery.

Though it has been in business only 19 months, Solos had sales of $19 million for the 12 months ended June 30, and was profitable, the two companies said.

“We see this as a very strategically positioned merger to take advantage of the rapidly growing minimally invasive market,” Solos President J. Stephen Holmes said. “The combined entity can set up an operating room completely.”

Last spring, Birtcher began merger talks with Cabot Medical Corp. of Pennsylvania, but Cabot broke off the negotiations within weeks. Had the deal gone through, the 53-year-old Birtcher would likely have disappeared into the larger Cabot, whereas the deal with Solos is truly a merger, Maya said.

Biomedical Merger

Birtcher Medical Systems and Solos Endoscopy say their merger will enable them to fully equip an operating room for minimally invasive surgery. In less invasive procedures, doctors use tiny instruments fed into the body through tiny incisions instead of the large incisions associated with traditional open surgery.

Birtcher Medical Systems Inc.

Location: Irvine.

Business: Makes medical equipment, including argon beam coagulation electrosurgical system for minimally invasive surgery.

Founded: 1938.

Chief executive: William E. Maya.

Employees: 172.

Revenue: $30.98 million for the fiscal year ended June 30.

Earnings: $1.55 million.

Source: The respective companies Solos Endoscopy Inc.

Location: Duluth, Ga.

Business: Makes accessories for minimally invasive surgery, including video cameras, insufflators, lavage irrigation pumps, laparoscopes, video monitors and recorders, light sources and precision hand-held surgical instruments.

Founded: 1990.

President: J. Stephen Holmes.

Employees: 90.

Revenue: $19 million for the fiscal year ended June 30.

Earnings: The privately held company does not release its earnings.