Analogic goes private in sale worth $1.1B

Salem News (MA)

April 23--PEABODY -- Analogic Corp., one of the city's largest employers, will no longer be a publicly-traded company.

It's not yet known what will happen when new private equity owners take over the Centennial Drive company, a leading developer and maker of medical imaging, aviation security and ultrasound devices.

Analogic first announced a "strategic review process" last June. That process culminated April 10, when Analogic announced it would be acquired by a New York City private equity firm that will take the company private.

The firm, an affiliate of the "health care-dedicated investment firm" Altaris Capital Partners LLC, will pay $84 per share in cash, a deal worth $1.1 billion.

Analogic will become the 17th company in Altaris' portfolio of companies that design and make medical products. Altaris manages $2.4 billion of equity capital, according to its website.

The deal is expected to close midyear. What it means for Analogic employees in the long run is not clear.

"What I've been hearing is it is going to be business as usual over there and they are going to continue to operate in the city of Peabody," Mayor Ted Bettencourt said.

Analogic employs 1,500 people worldwide, and more than 800 in Peabody, said Mark Namaroff, senior director of investor relations and corporate communications.

It's Peabody's third largest employer behind the Northshore Mall (2,800 people employed) and the Brooksby Village retirement community (900 employees), according to Curt Bellavance, the city's director of Community Development and Planning.

Bettencourt called the company "a great community partner" for its support of city programs and initiatives over the years, including Peabody's centennial celebration last year.

Few changes now

For the short-term, there should be few changes on the jobs front.

"First of all, we're at a very short period before the closing and under the agreement there are stipulations that we not do something in that regard," said President and CEO Fred Parks on employee retention, during an employee meeting the day after the sale announcement. A transcript of the meeting was filed with the Securities and Exchange Commission.

"There will not be extraordinary measures and I hope you have enough faith in the outcome of the company that that is unnecessary," he said.

"My sense is that people are relieved that it is out in the open," Namaroff said.

The company has trimmed jobs locally in recent years.

In 2015, under former President and CEO Jim Green, Analogic announced it was shifting manufacturing jobs to a facility in Shanghai, China, impacting about 90 jobs. The company offered a voluntary retirement program.

In fiscal 2014, the company took pre-tax charges of $2.9 million mostly due to 48 "involuntarily terminated employees associated with restructuring activities, including the optimization of our operations in Peabody ..."

Once Altaris takes over, sometime in mid-2018, Namaroff said Analogic will no longer need a board of directors, because Altaris has its own board.

It will no longer report its earnings and financials to Wall Street, and Analogic's stock will be delisted from the Nasdaq Stock Market.

A benefit for shareholders?

The company's stock price had been stagnant over the last four years, Namaroff said. That, in part, drove the board to seek a way to add value for its shareholders.

Analogic's chairman, Bernard Bailey, said in a statement the deal would be the best way to maximize shareholder value.

"Given the increasingly competitive markets that we serve, we have been focused on the need to achieve greater scale in order to generate sustained profitable growth," Bailey said in the statement.

The company had three options: break up into three separate parts, remain a standalone company or sell. Breaking up the company might prove risky and expensive, and the company could not stand on its own because it needed to scale up to compete, it said.

Whether the deal was good for shareholders depends on how you look at it, said Sanjay Kudrimoti, an associate professor of accounting and finance at Salem State University.

For the long-term investor, the deal at $84 per share represents a 25-percent premium to Analogic's stock price of $67.45 on June 7, when the company announced its strategic review.

But the company's stock traded for $96.05 on April 10, the day the deal was announced, so Kudrimoti said the company technically sold at a 12-percent discount.

Analogic being taken private is part of a wider trend of companies going private that started in 2010, Kudrimoti said.

In fact, the number of publicly traded companies has gone down in recent years, from 8,000 in the mid-1990s to 4,000 today.

There are reasons for the drop other than companies going private. When one public company buys another public company, the number of companies listed on U.S. exchanges is reduced. And if a company goes bankrupt, its stock is then delisted.

Kudrimoti said there are advantages to Analogic no longer being a public company.

"They can focus on their main, core business," he said.

Namaroff said Altaris plans to retain Analogic's name and presence in the marketplace.

Analogic was founded in 1967 by famed engineer and inventor Bernard "Bernie" Gordon, and its first headquarters were in Wakefield, according to the company's website. Its Peabody headquarters were built in 1982, according to city records.

The company first designed and made analog-to-digital and digital-to-analog converters, digital panel instruments, and computer peripheral analog-to-digital subsystems. In the 1970s, the company's technology pioneered the development of the computed tomography scanner.

In 1993, it purchased an ultrasound company, BK Medical, which is now BK Ultrasound.

Analogic expanded into airport security in 1997, with a luggage scanning system. The company says its imaging technologies can also be found in magnetic resonance imaging, digital mammography systems and aviation threat detection systems.

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