SUNRISE MEDICAL ACQUIRING DEVILBISS HEALTH CARE FOR $130 MIL.

SUNRISE MEDICAL ACQUIRING DEVILBISS HEALTH CARE FOR $130 MIL. in cash, stock and the assumption of debt, Sunrise announced June 30. The purchase adds a fifth core business to Sunrise's existing divisions, and gives the firm its first entry into the homecare respiratory equipment market. "With sales of $95 mil., DeVilbiss has achieved a position of global market leadership in home respiratory products," Sunrise says. Sunrise calls the deal "the largest in the history of the homecare equipment manufacturing industry." Terms of the definitive contract call for Sunrise to provide $37 mil. in cash, $34 mil. in Sunrise stock (1.5 mil. Sunrise shares) and to assume $59 mil. of DeVilbiss debt, to be paid off at closing. Privately held DeVilbiss currently is owned by an investor group led by Robertson, Stephens, which acquired the business in a 1990 leveraged buyout. Headquartered in Somerset, Pennsylvania, DeVilbiss will continue to operate as an independent entity under the leadership of current president and CEO Norman Orr. Once the deal is complete, Orr will report to Sunrise Chairman Richard Chandler. DeVilbiss products include nebulizers, concentrators and sleep products; the firm estimates its overall global market share in those areas at about 18%. Leading products include the Pulmo- Aide nebulizer and the MC-44 high-flow oxygen concentrator, "the top-selling oxygen concentrator in the world." Commenting on the deal, Orr said that DeVilbiss has been "operating in a leveraged mode for the last seven years, which has restricted our ability to make acquisitions and expand overseas as we would have liked." He added, "With Sunrise's financial strength, we can pursue new business opportunities more aggressively and also improve our marketing effectiveness by offering financing programs through SunMed Finance, Inc." For the fiscal year ending July 31, DeVilbiss expects to report operating profit of about $14 mil. on sales from continuing operations of $95 mil. The company would have been profitable with the exclusion of transaction costs. DeVilbiss will "definitely" be profitable in fiscal 1994, a Sunrise spokesperson said. Sunrise says that DeVilbiss has achieved compound annual sales growth of 14.5% over the past four years on continuing operations, "with similar growth in operating profit before interest, transaction- related expenses and taxes." Overseas markets account for about 30% of revenues. "Going forward, DeVilbiss is expected to represent about 23% of combined Sunrise revenues," Sunrise said. "For the trailing 12 months ending March 1993, Sunrise Medical's sales totaled $304 mil." The acquisition is the latest in a series of Sunrise purchases over the last couple of years. The company made seven acquisitions in fiscal 1992 (year ended June 30) and two in the first half of fiscal 1993. The DeVilbiss buy, however, is "by far" the largest purchase Sunrise has ever made, according to the spokesperson. Completion is subject, among other things, to government approval under Hart-Scott-Rodino. Sunrise expects to close the deal by July 31.