Flow General Inc. of McLean will pay $60 million to acquire the Worthington Division of Millipore Corp. An incorrect amount was published in yesterday's Business & Finance section.
Flow General Inc. of McLean disclosed yesterday it has tentatively agreed to buy a $37 million-a-year Massachusetts biomedical business for $68 million.
Joseph E. Hall, president of Flow General, said the company plans to pay cash to acquire the Worthington Division of Millipore Corp. of Bedford, Mass.
Worthington, which makes and markets biomedical products, including electronic gear to hospitals and research facilities, will become a subsidiary of Flow General if the transaction is completed on schedule in February or March.
While Flow General executives said the purchase would increase the company's biomedical business and expand its sales opportunities in Europe, the stock market reacted negatively to the announcement.
Flow General's stock was one of the biggest losers of the day on the New York Stock Exchange, dropping 2 3/8 to 24 3/8.
Executive Vice President Rodney Cook predicted the acquisition would depress Flow General's profits only temporarily. "We're optimistic that what would appear to be some dilution will be offset by the benefits that will be derived from the acquisition," he said.
Flow General plans to pay for Worthington by using some of the cash it now has invested in short-term accounts earning as much as 15 percent interest and will finance the rest with a recently negotiated $30 million line of credit from Philadelphia National Bank and West Germany's Deutschebank, Cook said.
President Hall said the operations of Flow and Worthington are "highly complementary" and the acquisition "constitutes a remarkable opportunity in terms of the overall fit between Worthington's traditional business and recent initiatives and Flow's biomedical activities."
Added Cook: "Worthington has a very good name in the field" and its products could be marketed by the same sales force. The first opportunity for integrating the businesses will be in Europe, where Flow General does extensive business, but Worthington does little, he said.
Flow General acquired three small companies for $18 million last year and had been looking for additional expansion opportunities. At an analysts meeting last fall, Hall warned that rising investor interest in the biomedical business was making acquisitions very costly.
Millipore has decided to pull out of the biochemical and diagnostic equipment business to concentrate on other fields, a spokesman for that firm said.
Millipore approached the McLean firm last month, and the two quickly agreed on a deal despite the relatively high price asked for Worthington, Cook added. The $68 million purchase price compares with Worthington's annual sales last year of $37 million. The Worthington operation has been profitable, but Millipore does not break out the division's earnings from other operations.
The purchase will not affect Flow General's operations here immediately. Worthington's principal plant is in Freehold, N.J., and it also has facilities in California and Massachusetts. Cook said an executive of Worthington will join Flow General's management to run the new division.
The two companies said they have signed an agreement in principle, and expect to execute a definitive agreement within 30 days and to consummate the deal within two months.