New Image Shares Drop After Deal Falls Through

Shares of New Image Industries Inc., a Canoga Park-based maker of dental imaging devices, tumbled sharply last week after Dentsply International Inc. backed out of a deal to acquire New Image.

Roger Leddington, chief executive of New Image, said the deal unraveled over “differences of opinion on certain issues,” including New Image’s chances for successfully defending a patent infringement lawsuit. Leddington said New Image is being sued by High Tech Medical Instrumentation Inc. of San Carlos. High Tech claims that its design of a camera component is being used by New Image in violation of patent laws, Leddington said.

“We are of course disappointed” about the collapse of the Dentsply deal, Leddington said. “However, New Image is a strong company and we do not expect this development to materially affect our business or operations.”

New Image also said it has been named in a purported class action lawsuit alleging violations of securities laws. Leddington would not discuss details of the suit, but said the company received a copy of the complaint Friday, and that one of the plaintiffs in the suit is a shareholder in the company.

On June 28, Dentsply, based in Des Plaines, Ill., said it had signed a letter of intent to acquire New Image for $16.375 a share in cash. New Image shares rose 37% on the news. But Dentsply’s letter of intent was terminated Sept. 27, New Image said, and that day the price of New Image stock quickly fell from $13 a share to $8.