I-Flow to Purchase San Diego-Based Competitor

I-Flow Corp., a maker of medical infusion pumps, agreed to buy San Diego-based competitor Block Medical Inc. in a deal that could double its size.

The Irvine company, which signed a letter of intent, said that it expects to pay $17 million in cash and stock for Block Medical’s assets.

Block Medical, a unit of Hillenbrand Industries Inc. in Batesville, Ind., had sales of $13.5 million for the fiscal year ended Dec. 2, 1995, compared to I-Flow’s total of $10.1 million last year, I-Flow officials said.

The San Diego company’s work force of 260 employees dwarfs that of the Irvine company, which has 70. Block Medical’s payroll includes 160 manufacturing workers at its plant in Tijuana.

I-Flow officials expect that the acquisition will enable the Irvine company to expand its product line, sales force and manufacturing capability.

The proposed acquisition marks a bold move for I-Flow, which last year had its first profitable year in 10 years. The company posted earnings of $1.1 million, or 12 cents a share, on revenue of $10.1 million last year. That compares with a loss of $1.7 million, or 20 cents a share, on $7.1 million in revenue the year before.

Officials expressed confidence in the company’s ability to finance the deal, however.

The company had nearly $9 million in cash on its books at the end of March, compared with about $6 million at the end of last year. The cash buildup is a result of operating earnings and shareholders exercising stock warrants, officials said.

What’s more, the company is debt-free--a plus that officials intend to use in attempts to attract financing.

Hillenbrand, a diversified holding company, bought Block Medical in 1991 as a way to enter the infusion-pump market, a spokesman said. However, the subsidiary lost money steadily until finally breaking into the black early this year, he said.

Hillenbrand, which makes hospital beds and other products, is selling the infusion-pump business because it wants to concentrate on market opportunities in home care and nursing-home care, the spokesman said.