Varex said that for 100% of the common stock on Direct Conversion, it will pay $75m, out of which $10m will be paid either in Varex stock or cash on the first anniversary of the deal’s closing.
Direct Conversion is a Stockholm-based company known for its brands including Ajat and XCounter. The company produces linear array digital detectors that use direct conversion and photon counting technology.
Last year, Direct Conversion’s revenues were €16m, with projected double-digit annual growth rates in the next five years. The company also has signed more than €40m in multi-year supply agreements with customers, primarily for its photon counting detector products.
Varex expects the acquisition will be accretive to adjusted EPS in fiscal year 2020 and could generate a greater return on the invested capital within three years.
Varex Imaging CEO Sunny Sanyal said: “Upon closing, this acquisition will expand our product portfolio to include new linear array digital detectors along with a revenue stream from these products for certain medical, dental and industrial applications.
“It is expected that the current applications will widen our addressable market for digital detector products by approximately $200 million over the coming years, with additional addressable market expansion potential of up to $500 million by replacing current CT detectors with photon counting technology in the future.”
The Utah-based company also pointed that the presently the X-ray industry is working on photon counting technologies as the detectors built with this technology can improve image quality while using lower dose and could offer more precise material discrimination.
Direct Conversion has been selling linear array digital detectors for certain medical and industrial applications and it could to continue working on applying this technology to additional applications, including medical CT detectors.
Direct Conversion CEO Spencer Gunn said: “We are excited to be joining Varex at this point in the growth and expansion of our digital detector array products. This transaction is expected to accelerate the adoption of this technology in the marketplace utilizing Varex’s position as one of the leading providers of digital detectors and its global distribution channels.”
