Merging with Intrasense? Cancelled
Merging with Intrasense? CancelledM&A /CORP. ACTION
FACT
DMS announced this morning the end of talks with Intrasense, with which it was supposed to merge its Imaging business.
ANALYSIS
As a reminder, DMS had announced in May that it had entered into exclusive negotiations with Intrasense, a listed Montpellier-based company which designs Myrian®, a software solution allowing medical images’ visualisation and analysis. If the deal had gone through, DMS would have contributed its imaging activities to Intrasense, in exchange for new shares to be issued, and would have become its majority shareholder. Now the negotiations are over, as we understand it, since both boards could not agree on the relative valuations, and both companies are now back to square one after weeks and months of uncertainty. Despite the fact we had doubts on the merits of such a merger (see our Latest dated 16 May), this is another blow to DMS and most of all for its core imaging business, which is currently suffering. New activities (Wellness and Biotech), albeit growing, are still hardly significant (sales of €0.6m in H1 18), while management’s initiatives concerning Imaging have not exactly been successful so far, to say the least. The group argues that it can always cooperate with Intrasense, on a commercial basis as opposed to buying it. True, but if this was the right move, why suggest buying it in the first place? With a 16% fall in sales in H1 18 and the time wasted on this potential acquisition, things are starting to look a bit worrying, we believe. Of course, the deal’s failure will not change our numbers, for the simple reason that it was not accounted for before its closing, but this new failure comes as (another) disappointment.
IMPACT
No impact on our numbers, which did not integrate this potential move. However, the H1 18 results due on 28 September are set to be disappointing, after the poor half-year sales numbers communicated on 29 August (see our comment on that day: “_Nothing new under the rain_â€).
DIAGNOSTIC MEDICAL SYSTEMS SA, (formerly known as DMS), is a France-based company, which together with its subsidiaries, designs, produces and markets medical imagery devices dedicated to conventional and digital radiology as well as bone densitometry. The Company manufactures a range of products for bone densitometry examination, including the ultrasound imaging system UBIS 5000, Challenger Envision, Stratos dR and Stratos. In the radiology sector, its products include Baccara dRF 43, EOL, Platinum and Da Vinci solutions, among others. In addition, it offers such products as scanners, transcranial Doppler, and Giotto Image mammography system. The Company operates several direct subsidiaries, AXS Medical, Apelem SAS, which manufactures radiology equipment, Medilink SARL, which produces Doppler and bone densitometry devices, Apelem SA, based in Spain, Alpha MOS based in France and one indirect subsidiary, SA Apelem and one indirect affiliated company, Spectrap.
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