ThermoTrex Medical plans to continueacquisitions after Bennett purchase

Company looks for strategic fits with Lorad and Bennett

ThermoTrex Medical's appetite for acquisition was not sated byits purchase of Bennett X-Ray this month. The new company, formedby the merger of Bennett with its former rival Lorad, plans tolook for opportunities to add to its holdings through acquisition.

ThermoTrex Corp. finalized the Bennett purchase earlier thismonth and created ThermoTrex Medical as a holding company forBennett and Lorad, which it bought in 1992. The agreement completesa process begun in June when ThermoTrex, of San Diego, and Bennett,of Copiague, NY, announced that they had signed a letter of intentconcerning the acquisition (SCAN 7/6/95).

Under the terms of the deal, ThermoTrex Medical will be a subsidiaryof parent ThermoTrex Corp. Lorad and Bennett will be separatedivisions within ThermoTrex Medical, which will be headed by Loradpresident Hal Kirshner, who will retain his title at Danbury,CT-based Lorad. Bennett president Calvin Kleinman will continueto head Bennett and will also lead a new radiography imaging unitwithin ThermoTrex Medical. Kleinman will report to Kirshner. Loradchairman Tony Pellegrino has been named senior vice presidentof medical products for ThermoTrex Corp.

The acquisition ends a long history of independence for BennettX-Ray. The company was founded in 1955 by Bennett Kleinman, CalKleinman's father, and was primarily an x-ray dealer until 1969,when it began manufacturing equipment under its own label. Thefirm continued to be privately held through the years and oftenreceived acquisition inquiries, according to Kleinman. It rejectedall of them until ThermoTrex made its proposal.

"I don't think any given two-week period would go by thatI wasn't approached by somebody, either in or out of the industry,"Kleinman said. "But this deal just makes such good businesssense for Bennett and ThermoTrex, with all the synergies thatare there."

Bennett had revenues of $43 million in 1994 and $22 millionfor the first six months of 1995. ThermoTrex Corp. had revenuesof $91 million in 1994 and $54.4 million for the first six monthsof 1995, much of which came on the strength of Lorad product sales.

Bennett accepted the ThermoTrex proposal because the San Diegocompany's financial muscle will give Bennett the opportunity tomove products to market much more quickly. Before the acquisition,Bennett had set a pace of entering one new modality a year, Kleinmansaid. Bennett will now be able to enter several new modalitiesat once.

"We could have done it ourselves -- we are a very financiallysound company -- but it was taking a long time," Kleinmansaid. "Sit back and watch now how fast we can do it."

No consolidation. Many corporate mergers often find one ofthe partners shutting down its headquarters in an effort to cutcosts. This pattern has been reflected in several recent mergers,including ATL and Interspec, Sopha and Summit, and Cemax and Icon,all of which consolidated in a single home office.

The Bennett/ThermoTrex deal, however, has been structured toachieve maximum cooperation between Lorad and Bennett while minimizingcorporate disruption. There will be technology exchange betweenLorad and Bennett but there will be no consolidation of corporateresources or distribution channels, Kirshner said. One concernof many Lorad and Bennett dealers has been that the merger wouldput many out of business.

"There is no consolidation," Kirshner said. "Thedistribution channels for each company will be separate."

Indeed, Kleinman said Bennett is currently in a hiring mode,and recently broke ground on a new wing that will add 30,000 squarefeet to the company's 100,000-square-foot headquarters in Copiague.

Lorad and Bennett dealers will benefit by gaining access toproducts manufactured by their erstwhile competitors. ThermoTrexseems to be willing to accept some duplication of effort in exchangefor more comprehensive distribution.

"I think that by doing this, we can still maximize bothdistribution networks," Kirshner said. "I'd rather thatwe compete with ourselves than somebody else."

Bennett, for example, is developing a new line of radiographicproducts to be sold under the Lorad label, and this line willbe displayed at the upcoming Radiological Society of North Americameeting. Before the merger, Lorad did not have a line of radiographicequipment, and it was Bennett's position in radiography that initiallyattracted ThermoTrex, Kirshner said.

"Bennett was not acquired for the mammography business,"Kirshner said. "Bennett was acquired because it is a fast-growing,high-technology company that made great strides in digital imaging,but more importantly to Lorad, gave Lorad's distribution networkaccess to a broad range of radiographic products, which we didn'thave before."

It is ThermoTrex Medical's position in mammography, however,that is drawing double takes. Prior to the merger, Lorad and Bennettwere the fastest growing companies in the modality, each withmarket shares at about 21% to 22%. Due to fast growth in mammographythis year, Kirshner pegs ThermoTrex Medical's U.S. market shareat over 50%. The next closest competitor, GE Medical Systems,is in the 23% range, with the rest of the pack registering inthe single digits.

In digital breast imaging, Lorad and Bennett will look forways to integrate their technology. The two companies market digitalspot imaging systems and both are developing full-view digitaldevices. Full-view digital is one area where technology exchangebetween Lorad and Bennett will be emphasized.

Bennett also plans to use its large-area digital detector technologyto expand in areas outside mammography, and the backing of ThermoTrexwill give it the financial wherewithal to do so, according toKleinman.

"We will bring (digital technology) into many modalitiesand will do that very rapidly," Kleinman said. "A privatelyheld company could do that, but it would take many years. WithThermo's backing we plan to do that at a very rapid pace."

The combination of Lorad and Bennett will only make thingstougher for weaker mammography companies that must compete withthem, according to Kleinman.

"They are going to be disadvantaged as we share our technologicalbase," Kleinman said. "That is going to happen in theradiography field, too."

Some of those companies could become the target of future acquisitionsby ThermoTrex. Kirshner said his company will be aggressivelylooking at buying firms that have a strategic fit with Lorad andBennett, both in and outside the mammography field.

"It is definitely our plan to acquire more companies thathave a synergistic, strategic fit with ThermoTrex Medical, eitherthrough Bennett or Lorad," Kirshner said.