SQUIBB's SPINOFF OF IMAGING, PATIENT MONITORING BUSINESSES
SQUIBB's SPINOFF OF IMAGING, PATIENT MONITORING BUSINESSES is timed to coincide with the return of profits in the first half for Advanced Technology Laboratories and Spacelabs. The new company, Westmark International, also will include Squibb's overseas ultrasound distribution operations. On July 9, Squibb announced it plans to merge the high technology segments of its medical products business into an independent company, via a tax-free distribution of shares to Squibb stockholders. ATL and Spacelabs both have apparently rebounded from new product difficulties which bogged down earnings in 1985. Squibb Chairman Richard Furlaud characterized the combined businesses as "currently profitable, well-financed and debt-free." Combined sales of ATL, Spacelabs and the ultrasound distribution business were about $200 mil. in 1985, Squibb says. ATL reported a 2% dip for the year, but predicted improved performance in 1986 on the basis of a $10.8 mil. backlog of orders for Ultramark 4 and a $10.5 mil. backlog for Ultramark 8. Spacelabs reported sales of $79.7 mil. for the year, up 2%. Westmark's chairman and CEO will be Dennis Fill, currently the president and chief operating officer of Squibb. Fill joined the company in 1958, becoming president of the company's pharmaceutical group in 1968. Furlaud will add the title of president of Squibb Corp. on Fill's departure. Moving up in the corporate hierarchy is Jan Leschly, 45, who assumes one of two exec VP positions. The other exec VP is Charles Sanders. The two exec VPs and Furland will form an Office of the Chief Exec. The new company will have about 2,700 employees, concentrated on the west coast. ATL is headquartered in Seattle, and has about 1,300 employees; Spacelabs also is in Washington, with over 1,000 people; and Squibb Medical Systems (which will be renamed) in Bellevue, Washington, employs about 500 people. The objective of the spinoff is to "maximize the value of this business for the Squibb stockholders by allowing it an environment that enables it to grow and prosper to a greater extent than might be possible as a Squibb subsidiary," Furlaud commented. The company noted that the move will allow Squibb to "focus its efforts and resources more directly on its other businesses." Squibb also is streamlining its personal products business -- the firm recently put its Charles of the Ritz cosmetics subsidiary up for sale. Goldman Sachs is advising on both transactions. Separating out its medical products businesses also fits with an evolving Squibb strategy to subdivide its business into smaller, more manageable units. In the company's drug business, Squibb recently set up a new unit, Princeton Pharmaceutical, to handle Corgard and Corzide and an anti-arrhythmic. The move alleviated a product positioning dilemma vs. Capoten. Squibb will retain a 10% equity stake in Westmark. The company expects the deal to go through in the fourth quarter. As yet, a ratio formula for the share distribution has not been established. The transaction will not result in any significant charge to earnings, the company said.
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