Davstar Ltd. Buys Allstate; Acquisition Is Firm’s 3rd in 9 Months

Davstar Ltd., a manufacturer of disposable medical products, said Monday that it has acquired Minneapolis-based Allstate Inc. for $2.1 million in stock.

Allstate is a private health-care company that manufactures reusable diapers, bed liners and other absorbent products at a plant in South Dakota. The company had 1994 sales of $2.2 million and was profitable, according to Davstar officials. They would not disclose Allstate’s income, however.

Buying money-making companies in stock deals that don’t tie up a lot of cash is part of a strategy to push Davstar into the black.

“We have a top corporate goal to get this company to profitability,” said Michael Piraino, Davstar executive vice president. “We think the way to tackle the very fragmented urology industry is to acquire companies that have been profitable.”

The Allstate purchase is the third acquisition for Davstar since October, 1994, when the company made a number of senior management changes, including naming Charles A. Laverty as chief executive and bringing in Piraino. Last December, the Costa Mesa company bought Minneapolis-based Dacomed, another urological product and service company, for about $15 million in stock.

Davstar lost $6.6 million on sales of $4.3 million in 1994. The urological product company has lost $5 million on sales of $3.6 million through the third quarter of this year.

Davstar’s stock closed at $3.625 on the American Stock Exchange, unchanged from Friday’s closing price.