Business & Finance
Varex to close acquisition of Direct Conversion AB in Q3 current fiscal year
22 March 2019 -

X-ray imaging company Varex Imaging Corporation (Nasdaq:VREX) on Thursday launched an agreement to acquire at least 90% of the outstanding shares of common stock of Direct Conversion AB (publ) based out of Stockholm.

Under the terms of the agreement, Varex will pay an aggregate purchase price of EUR75m for 100% of the outstanding shares, subject to customary adjustments, of which EUR10m will be paid in either common stock or cash on the first anniversary of closing, which is expected to be completed in the third quarter of the current fiscal year.

Under its Ajat and XCounter brands, Direct Conversion provides innovative linear array digital detector products that are incorporated into imaging systems used globally by a broad range of medical and industrial customers: systems used by orthodontists, orthopedic radiographers, oil & gas engineers, food packagers and nuclear site inspectors. It is the largest manufacturer of CdTe detectors. In 2018, it had revenues of EUR16m with projected double-digit annual growth rates over the next five years.

Direct Conversion also has more than EUR40m in signed multi-year supply agreements with customers, primarily for its photon counting detector products. It has commercialized linear array digital detectors for certain medical and industrial applications and will continue on applying this technology to medical CT detectors.

Upon closing, Varex expects the acquisition to be accretive to adjusted EPS in fiscal year 2020 and to generate a return on invested capital greater than its cost of capital within three years.