ASX-listed distributor, itX (ASX: ITX) has acquired medical device specialist, Sydmed, for $3.2 million.
itX managing director, Laurie Sellers, said the deal allowed it to expand its technology distribution prowess into the specialised but complementary medical device field. Sydmed was established 20 years ago and supplies a range of electronic equipment with a particular focus on urodynamics and ultrasound goods required in the Urology field.
As part of the deal, itX will retain Sydmed’s full team of 5-6 employees and has also recruited medical industry veteran, Len Bevis, as national sales manager. Sydmed founder, Andrew Lloyd, will stay on-board as a part-time consultant for an undetermined period of time.
"It's exciting for us in that it opens up a whole new market place, which doesn't seem to be as subject to the dynamics of the IT industry, which focuses on low margins," Sellers told ARN.
itX was first made aware of Sydmed's position in the market through his team at Briell Marketing. Lloyd's decision to sell his business was due to health reasons, he said.
“It’s a similar business to Briell in that it’s relatively small, niche but very high margin,” Sellers said.
Sydmed will become a part of itX’s technology products division, which runs in parallel with its IT distribution and services arms. The $3.2m purchase price covers goodwill and net tangible assets and will be funded from itX’s purse, leaving $7m in cash reserves.
"We deliberately started our Technology Products division to look for opportunities which allowed us to grow with higher margin technologies that were somewhat out-of-the-box,” Sellers explained. He claimed Sydmed was not that left of field to the markets itX operated in and compared its ultrasound equipment to “overgrown laptops” based on a Windows platform with customised software and keyboards.
“The health infrastructure market is relatively immature one with distribution – there’s no dominant player in that space,” Sellers said. “It’s ripe for aggregation and for a bigger player to emerge.”
itX has signed lease for Sydmed’s existing facilities, which are owned by Lloyd, but will look to integrate the business into its headquarters further down the track.
The latest acquisition ties into itX’s long-term plan to buy companies for growth in areas outside its traditional IT portfolio. In July 2008, itX acquired specialist marketing organisation, Briell Marketing for $6m. A year earlier, it purchased Web hosting company, ICO International, to sit within its NeXos services arm.
itX’s foray into the medical technology business also coincides with the Federal Government’s announcement that it will spend $446.7m on a national e-health records system over the next year, as part of the 2010-2011 Budget.
“We look forward to great prospects – it’s a new market for us to look at, and we’ll be looking into what products we can add to the portfolio,” Sellers said.