BY LAURA GOLDBERG
The Cincinnati Enquirer
The acquisition of Gull Laboratories Inc. by Newtown-based Meridian Diagnostics Inc. will move the company toward its goal of becoming a leader in infectious-disease diagnostics, a Meridian official said Tuesday.
"The acquisition allows us to take a pretty significant step in that direction," said Rick Eberly, Meridian's vice president of sales and marketing.
Meridian announced Monday an agreement in principle to buy Salt Lake City-based Gull for about $25 million .
Meridian had about $35.2 million in net sales last year, while Gull has about $22 million in annual sales.
Mr. Eberly said the acquisition will put Meridian in the midrange category -- those doing $50 million to $100 million in sales -- of diagnostic companies.
There are 50 to 100 such companies, he said, with 10 to 20 of them specializing in infectious diseases.
Some bigger companies also sell tests for infectious diseases. Meridian will finance the deal using $20 million borrowed in September 1996 by issuing subordinated debentures.
"We're simply exercising one of our key strategies for growth, and that is acquisition," said Charles Caso, Meridian's director of marketing.
Both Meridian and Gull make infectious-disease products, but different kinds. Their products complement each other, Meridian officials said.
Each company has market-share dominance for different tests, Mr. Caso said.
He said Gull's include Epstein-Barr virus, herpes simplex and chicken pox; Meridian's include adult diarrheal diseases, E. coli and the bacteria that causes stomach ulcers.
"There's a trend toward consolidation in the industry," said Michael Malan, Gull's chief financial officer. "Even with the combination of Meridian and Gull, we're still a small, niche-type player in the overall diagnostic industry."
At least one analyst said the acquisition appears to be a good fit.
"It certainly looks like a nice fit from a product standpoint," said Richard Eastman, managing director with the Milwaukee-based Cleary Gull Reiland & McDevitt. "It also offers Meridian advantages from a distribution standpoint."
About half of Gull's sales are in Europe, focusing on France, Germany, Belgium and the Netherlands.
And about $5 million of Meridian's sales are in Europe with Milan, Italy, as its European headquarters.
Mr. Eastman also said offering a broad range of products is the game in the health-care business.
Both Meridian and Gull have tended toward niche markets to stay out of the way of big competitors, he said.
"I don't think it changes the competitive landscape a great deal," he said of the acquisition.
No decisions have been made about potential job cuts, facility consolidations or whether Gull's name will change.
