Vital Images to be sold in $273M deal

  • Article by: WENDY LEE , Star Tribune
  • Updated: April 27, 2011 - 9:21 PM

The Minnetonka company's buyer plans to keep it intact and possibly even add jobs.

The Minnetonka-based software company Vital Images Inc. said Wednesday that it will become part of Toshiba Medical Systems Corp. in a $273 million deal.

Toshiba is Vital Images' largest customer, with 50 percent or more of the smaller company's revenue coming from Toshiba accounts in any given quarter. Vital Images sells visualization and analysis software for physicians and health care specialists.

"It's been an open question for a long time: Why doesn't Toshiba just buy them?" said Ernie Andberg, an analyst with Feltl and Co.

The companies said there are no plans to move or cut workers, and Toshiba said its intent is to keep Vital Images' leadership in place and its headquarters in Minnesota.

Vital Images has 245 full-time employees worldwide, with 175 employees in the state. Its $59.7 million in revenue in its latest fiscal year ranked 75th among public companies in Minnesota.

CEO Michael Carrel said local employees were excited to hear the news and applauded during an internal meeting on the acquisition. "There was a tremendous amount of positive energy about the partnership and coming together," he said.

The deal is expected to close in the second or third quarter. In the future, Carrel said, the company will probably add technical and clinical customer support positions, as well as research and development-related jobs to its Minnesota operations.

The $18.75-a-share price reflects a 39 percent premium over the average stock price for the last 30 days, the companies said.

"Quite simply, it was a really good price for our shareholders," Carrel said.

Doug Ryan, vice president of marketing and strategic development for Toshiba America Medical Systems, said the company had been in discussions with Vital Images on a possible acquisition for years.

Toshiba said the purchase will strengthen its imaging solutions business.

Vital Images' stock closed before the announcement at $14.18, down 8 cents a share.

Wendy Lee • 612-673-1712

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