Advanced Medical to Buy Infusion Firm

Advanced Medical Inc. said Monday that it will buy privately held Ivac Medical Systems Inc., a former Eli Lilly & Co. unit, for about $400 million in cash, a move that would create one of the world’s largest makers of intravenous infusion therapy products.

Under the agreement, Ivac and Advanced Medical’s wholly owned subsidiary, Imed Corp., would merge to form a new company that would develop and manufacture infusion pumps that regulate the amount of intravenous fluid being administered to a patient, as well as proprietary disposable products.

The acquisition price and costs would be financed through $315 million in senior debt and $125 million in subordinated notes issued to the public, said Joseph Kuhn, Advanced Medical’s president. In addition, Advanced Medical Chairman and Chief Executive J.M. Picower would contribute as much as $77.5 million, Kuhn said.

The combined company would have estimated revenue of $353 million.

San Diego-based Advanced Medical, through Imed, is already one of the nation’s largest developers and manufacturers of intravenous infusion pumps and proprietary disposable products. It has sales in 38 foreign countries.

Ivac, also based in San Diego, is a major provider of infusion systems and related technologies to the health-care industry.

Advanced Medical shares closed at $2.875, up 87.5 cents, on the American Stock Exchange.

Eli Lilly sold Ivac on Dec. 31, 1994, to DLJ Merchant Banking Partners, River Medical Inc. and other investors.

Advanced Medical said it expects to take an unspecified one-time charge to pay for the merger. It did not say when the charge would be taken.

William J. Mercer, Ivac president and chief executive, would become president and CEO of Advanced Medical. Kuhn would become the new company’s executive vice president and chief financial officer.

The deal is expected to close by the first quarter of 1997, subject to regulatory approval. It has been approved by both firms’ boards.