A start-up manufacturer of organ transplant equipment has reached an agreement in principle to pay about $4.6 million for Precision Laboratory Plastics Inc., a Centralia, Wash., injection molder of disposable medical products.
Bio-Preserve International Corp. wants to use PLP to manufacture plastic components for Bio-Preserve's organ transplant equipment and plans to expand PLP's proprietary product line, said Jerry Smith, president of Bio-Preserve, based in Redmond, Wash.
The deal is not final, but PLP owner Hugh Smith said Bio-Preserve offered cash and stock valued at about twice Precision's $2.3 million in annual sales. How much Bio-Preserve stock he receives is being negotiated, he said.
Bio-Preserve announced the deal Feb. 3.
PLP has one facility, a 25,000-square-foot plant with 22 injection molding machines, two extrusion lines and a mold-making shop. Its products include vials, transport tubes and serum specimen collection kits sold directly to hospitals and testing labs.
Bio-Preserve is in talks with other companies about bringing additional business to the PLP plant, either from manufacturing high-volume product lines for other companies or by acquiring the patents. Jerry Smith said he could not say what those products might be.
The purchase also will help Bio-Preserve cut costs on components it currently buys from other molders, he said. For example, the company pays $250 for one disposable plastic component it will be able to make at PLP for about $15, he said.
``This acquisition of a profitable medical manufacturing company will enable Bio-Preserve to accelerate development, manufacture and sales of current and future ... products while contributing nicely to the bottom line,'' he said.
The company plans to expand PLP's plant to 70,000 square feet in two to three years, Smith said. Bio-Preserve just hired a manager for the PLP operations, and when he gets better acquainted with the plant, the firm will make firmer decisions about the expansion, Smith said.
PLP had about $340,000 in profit in 1997, according to information from Bio-Preserve. The injection molder's growth has been ``hampered due to lack of capital and little or no marketing,'' Bio-Preserve said.
The firm recently made the first sale of its organ transplant units, which can help organs last longer outside the body, increasing their viability for transplant and biomedical research. The product is based on perfusion, using the organ's own vascular network to circulate fluids.
Bio-Preserve has been funded to date with at least $1.5 million loaned from a group of investors, and is raising another $2.25 million, Smith said. He manages several investment banking firms in the Seattle, Wash., area.