Sale to End Jobs at Edwards Lifesciences

Edwards Lifesciences Corp., the No. 1 artificial heart-valve maker, said Tuesday it agreed to sell most of its unprofitable Bentley line to Germany’s Jostra AG for about $30 million, eliminating about 60 jobs.

Edwards will take $360 million in pretax charges, mostly related to the sale of the product line and severance costs for employees in Irvine, where Edwards is based, and Puerto Rico, the company said. As many as 47 employees will be terminated in Irvine, the company said.

Bentley, whose products support hearts stopped during surgery, was a distant third behind rivals Sorin Biomedica SpA and Medtronic Inc. and losing ground. A new procedure that works while the heart is still beating decreased demand, said David Erickson, an Edwards spokesman.

“The outlook was not getting any better,” said Erickson, vice president of investor relations.

Shares of Edwards, which was spun off earlier this year by Baxter International Inc., rose $1.06, or 5%, to $23.88 on the New York Stock Exchange.

The Bentley line, which employs about 600, was acquired by Baxter from American Hospital Supply Co. in the mid-1980s.

Edwards will keep distribution rights for Bentley products in Japan and other countries outside the U.S. and Western Europe, where open-heart surgeries using cardiopulmonary products continue to grow, said Chief Executive Michael Mussallem.

Edwards will also maintain its Macchi line of cardiopulmonary products, as well as plants in Sao Paulo and the Netherlands.

The transaction is expected to close in September.

After the transaction, Edwards will have 5,000 employees, including 1,500 in Irvine and 1,200 at its manufacturing facilities in Puerto Rico. About a dozen Edwards employees will transfer to the Jostra’s Bentley operations.

Jostra plans to establish its own quarters for Bentley in Irvine.

Edwards said a reduction in goodwill, partially offset by a slightly higher income tax rate, will add about $4 million to this year’s earnings. The reduction in goodwill and cost savings from the sale, offset by the tax rate, will add about $10 million to $12 million in 2001. The company declined to give earnings estimates for those periods.

“I think this was a key trigger people were looking for,” said Merrill Lynch analyst Katherine Martinelli. She raised her 2001 earnings estimate to $1.05 to $1.25 following the company’s announcement.

Jostra, a maker of medical devices for open-heart surgery, will acquire Bentley’s oxygenators, blood reservoirs and filters. The company, which is based in Hirrlingen, Germany, will also be responsible for Edwards’s cardiopulmonary-products manufacturing in Puerto Rico.

The combined company will have a chance at gaining industry leadership in the U.S., said Edwards spokesman Scott Nelson. Bentley will continue as the preferred supplier to Edwards’ cardiopulmonary-services operations.

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Bloomberg News was used in compiling this report.