Salt Lake City-based Varex Imaging Corp. has entered into an agreement to acquire at least 90 percent of Direct Conversion AB, a Stockholm-based manufacturer and marketer of linear array digital detectors utilizing direct conversion and photon-counting technology. The company is also known by its brand names of Ajat and XCounter. Varex is an independent supplier of medical X-ray tubes and image processing equipment.
The aggregate purchase price is 75 million euros for 100 percent of the outstanding shares, of which 10 million euros will be paid in either Varex common stock or cash on the first anniversary of closing. Varex plans to fund the payment using available cash and debt under its existing credit facility. The transaction is expected to be completed in the third quarter of this year.
In 2018, Direct Conversion had revenues of 16 millioneuros with projected double-digit annual growth rates over the next five years, Varex said in a statement. Direct Conversion also has more than 40 million euros in signed multi-year supply agreements with customers, primarily for its photon-counting detector products.
“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,” said Sunny Sanyal, CEO of Varex. “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 X-ray imaging industry has been working on photon- counting technologies because detectors built with this technology can significantly improve image quality while using lower dose and performing more precise material discrimination, Sanyal said. Direct Conversion has successfully commercialized linear array digital detectors for certain medical and industrial applications and is expected to continue to work on applying this technology to additional applications, including medical CT detectors.
Spencer Gunn, CEO of Direct Conversion 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.”
Founded in 1930, Utah, Varex employs approximately 2,000 people located at manufacturing and service center sites in North America, Europe and Asia.