Medtechnica Ltd. (TASE: MEDI) has sold its distribution rights on the diagnostic products of Olympus Diagnostics GmbH for NIS 26 million. The sale followed the acquisition of Olympus Diagnostics by Swiss laboratory equipment manufacturer Beckman Coulter International SA (NYSE: BEC), which distributes its products in Israel through Teva Medical Ltd.
Olympus Diagnostics generated NIS 27.5 million revenue for Medtechnica in 2009. Medtechnica said that its gross profit margin from this business was essentially the same as its general profit margin, at 33% in the fourth quarter of 2009.
Eldav Investment Ltd. (TASE: ELDAV-L) owns the 42.1% controlling interest in Medtechnica. Eldav CFO Avi Klainer said, "In the wake of the acquisition overseas, our agreement with Olympus was transferred to Beckman. We didn’t want to create a situation in which we were distributing Olympus products alongside Teva Medical and in competition with it, so we asked to terminate the contract. In exchange, we obtained NIS 26 million in compensation. Yes, we took care that the new contract would not include a long non-competition period, and we're already looking for competiting products to distribute."
Several months ago, Medtechnica announced the termination of its exclusive distribution contract with 3M Corporation (NYSE: MMM). Medtechnica's revenue from 3M products was about the same as from Olympus, and the company is looking for competing products to distribute. The company said at the time that it did not expect a material effect on its activity from the termination of the contract.
Medtechnica is one of Israel's leading distributors of medical equipment, representing 150 suppliers, including large multinational corporations.
Medtechnica's share price fell 2.8% in morning trading to NIS 27.50, giving a market cap of NIS 385 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2010
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