Growth by Acquisition

Posted on: October 25th, 2013 by admin
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Last month Analogic Corporation announced that it had acquired the remaining stake in PocketSonics, a privately held firm based in Charlottesville that was a spin out from the University of Virginia. For the past three years PocketSonics — which has yet to generate any revenue — has been developing ultrasound technology for point-of-care and image guidance procedures. Analogic, which had previously held a minority equity position, paid $11 million for the balance of the shares plus future payments of $3 million based on the achievement of certain milestones. This news follows hard on the heels of Analogic’s acquisition earlier this year of Vancouver-based Ultrasonix, a manufacturer of ultrasound imaging systems, for $83 million.

Analogic has acquired several independent imaging companies over the past twenty years, including the Danish ultrasound manufacturer BK Medical in 1993, and ultrasound transducer manufacturer Sound Technology in 2002. In addition to its ultrasound products, Analogic also manufactures the Anrad line of X-ray detectors — based on state-of-the-art amorphous selenium — that are used in mammography systems, with a special emphasis on digital breast tomosynthesis.

Analogic was established in the 1960s by a brilliant engineer, Bernie Gordon, who had invented and commercialized the world’s first solid state analogue-to-digital converter, for which he would later be recognized with the National Medal of Technology by Ronald Reagan (see image below). In 1975, with advice from Allan Cormack — who would later win the Nobel Prize in Medicine — Bernie and his fellow engineers from Analogic were able to invent and patent the instant imaging CAT scanner, groundbreaking technology that they licensed to Siemens. With his “Yankee spirit of innovation”, Gordon managed to grow Analogic organically, the company operating as an original equipment manufacturer (OEM) and supplying its systems to leading imaging companies.

Analogic became a publicly traded company on the NASDAQ stock exchange in the late 1970s and in less than a decade its market capitalization was significant, making Gordon a very wealthy man. He became a philanthropist, setting up a charitable foundation, where the major beneficiaries have been academic institutions such as Tufts University and his alma mater, MIT.

Bernie served as CEO, President and Executive Chairman of Analogic, finally retiring in 2004 at age 77 to help launch NeuroLogica, with a CAT scanner to assist stroke and trauma patients. Although Analogic encountered headwinds in 2008, its stock is now at an all-time high. Their recent growth has been fuelled by acquisitions and they no doubt have faith in the market potential of PocketSonics.

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