From the September 2, 1987, issue of Diagnostic Imaging Scan

Diasonics, Toshiba execs rebuff talk of mergerWith major imaging equipment vendors becoming fewer in number and bigger in size, speculation on what shoe will drop next has become a favoritetopic for party talk. For reasons cited below, much of the rumor-mongeringhas focused on the possibility that Toshiba might be looking at Diasonics as acquisition material:

** Toshiba is facing a possible ban on U.S. imports (SCAN 7/22/87);

** Diasonics will have stronger global competition in MR salesfrom General Electric cum Thomson-CGR (SCAN 8/5/87), which appearspoised to introduce mid-field MR systems in the U.S. (SCAN 8/19/87);and

** Diasonics has settled its shareholder suit (SCAN 7/8/87), whichmakes it a more attractive acquisition candidate.

Both companies disclaim that talks are going on. They do havea cooperative research agreement in MR spectroscopy, but thereare no indications that the relationship has proceeded further.

"We're not looking to be acquired," said Albert Waxman,chairman and CEO of Diasonics. "We have gone through a difficulttime financially and have come out the other side. There are strategiesin place for the company to grow substantially."

Within its current framework, Diasonics may become a $400 millionto $500 million company in the next few years, Waxman said.

Ronald Schilling, vice president and general manager of ToshibaMedical Systems in the U.S., said that talk about a Toshiba andDiasonics link-up does not take into account the big picture forToshiba.

"I don't think talking about a specific company makes senseat present," Schilling said. "Toshiba has major plansfor the U.S. market. Our goal is to grow (in the U.S. market)from the $100 million range to $300 million in five years or less."

The possibility of an import ban demands some readjustment instrategy, however, he noted.

"It means two things need to take place: One, we need toaccelerate our manufacturing plans, which is being done, and two,we need to seriously consider the possibility of partners,"he said.

A partnership, Schilling said, may mean anything from "purchasinga position with a company to acquisition." Intermediary positionsthat might involve marketing or manufacturing joint ventures mightalso be considered.

Schilling said Toshiba is open to all of these options as waysof building up its U.S. presence, but that any strategy must becomprehensive, focusing on the company's total business requirements.

Toshiba is not expected to make a major move before Congress decideson what, if any, import ban restrictions should be meted out.Toshibabought Diasonics' MRI business in 1989 (SCAN 8/30/89).