Davis & Geck: One Deal, Two Rationalizations
Executive Summary
Acquisition are almost always difficult and confusing, particularly as executives sort out personal fortunes from corporate fortunes. What happens when you go through two in as many months?
Acquisitions are almost always difficult and confusing, particularly as executives sort out personal fortunes from corporate fortunes. What happens when you go through two in as many months?
That’s what Davis & Geck executives are dealing with right now. Last June, after months of rumors, American Cyanamid finally reached an agreement to sell the company to B. Braun Melsinger of Germany. The company began a wrenching series of rationalizations and consolidations, including the departure of the two most senior executives of the company, Bill Poole and Jack Clifford, and the shifting of most operations from Cyanamid headquarters in Wayne, NJ to its manufacturing facility in Danbury, CT.
But two months into the process, American Cyanamid itself was bought by American Home Products. American Home officials then broke off the Braun deal, which had required Cyanamid to help fund the acquisition.
What next for Davis & Geck? The combination of D&G with AHP’s Sherwood Medical would have made an interesting player in minimally-invasive surgery. But Sherwood announced several months ago that it was exiting MIS; reports are that D&G is planning to do so as well, to focus on its core suture business. The pressure on D&G is mounting because of increased pressure from its two main competitors. Ethicon’s market share has recently begun to rise again and the company just purchased Mitek Surgical, a manufacturer of innovative anchors, while US Surgical is now reporting that suture sales were up 50% last year.