Sectra, Philips finalize mammo deal

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Sectra has completed its mammography-modality deal with Royal Philips Electronics.

Philips paid EUR 57.5 million ($82 million U.S.) in a cash-on-cash and debt-free basis and took over the modality operation Sept. 1.

"The deal with Philips will give us the resources we need to continue our efforts and expand our business. In Medical Systems, we can concentrate on our core business and aim for a larger share of the market growth for medical imaging IT systems, which is growing rapidly," said Torbjörn Kronander, president of Sectra's medical systems operation, in a statement.

The divested operation represented 14 percent of Linkoping, Sweden-based Sectra Group's net sales for fiscal year 2010/2011 and has approximately 110 employees. The transaction comprises Sectra's mammography-modality operations worldwide, except for Australia and New Zealand where Sectra will continue to sell and service the MicroDose mammography-modality under a separate distribution agreement with Philips.

The agreement includes an additional earn-out of EUR 12.5 million ($18 million), which will fall due if the agreed terms and conditions are achieved over a period of five years. This transaction, excluding the possible earn-out, is estimated to generate a capital gain in terms of earnings of about SEK 300 million ($427 million) after tax for Sectra.