In Diagnostic Supply, A Powerhouse is Launched
The merger of two leading diagnostic suppliers has created a national presence in the troubled diagnostic imaging distribution segment. Platinium Equities paid $250 million to buy the dx imaging distribution businesses of Philips Medical and PSS, but even at that cheap price, the road to success is fraught with obstacles. Notably, the imaging film segment is under considerable competitive pressure from the increasing popularity of PACS.
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After a meteoric rise through the late 1980s and early 1990s, PSS began to stumble badly, beginning with a difficult IPO in 1994 and culminating in a terminated acquisition offer in 2000. Having seen even its last hope--a face-saving merger--evaporate, PSS' senior managers had no choice but to try to turn the company around on their own. That's what they've done for the past eighteen months, with a strategy focusing on better financial controls, on the one hand, and a rededication to customer service, on the other.
By acquiring Marconi Medical Systems in a $1.1 billion deal announced in July, Philips NV tacks on volume and adds scale to its medical systems business. Strategically, however, the move is part of a continuing response to competitor GE Medical Systems' ongoing acquisition efforts, which have challenged its competitors in medical capital equipment to get bigger to keep up.
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