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May 02, 2005 02:00 AM

West Pharmaceutical buying Tech Group

Steve Toloken
Assistant Managing Editor
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    West Pharmaceutical Services Inc., a maker of closures and disposable medical components, is buying injection molder Tech Group Inc. for $140 million.

    The deal will give West a larger presence in health-care and consumer-product manufacturing.

    The April 29 deal, which is expected to close in May, will bring nine Tech facilities under West, but the companies said it will not include Tech's stake in Tech Group Asia.

    Officials with West, based in Lionville, Pa., and Tech, based in Scottsdale, Ariz., could not be reached, but Tech Chairman Steve Uhlmann said in a news release that the sale will ``provide a wider and more stable global footprint for both businesses.''

    The companies said Tech Group will maintain its current operating structure ``through an interim period,'' and said a portion of the $140 million purchase price will be deferred and will be contingent on how the business does in 2005 and 2006.

    Publicly traded West estimates that its existing plastics business and Tech's will generate about $180 million in sales for all of 2005. It said Tech's business will add about $70 million in sales for the remainder of the year, and 2-5 cents per share to earnings.

    ``As a result of this acquisition, West will be positioned as a significant player in manufacturing high-precision plastic components and devices for the medical and consumer markets,'' said Donald Morel, West's chairman and chief executive officer.

    Privately held Tech reported annual sales of about $145 million in the Plastics News ranking of North American injection molders, published April 11.

    An analyst who follows West said the company wants to move beyond its dominant position in the niche business of stoppers and seals, and tap into larger markets like medical component manufacturing and consumer products.

    The company already has made some moves in that direction, said R. Bentley Offutt, president of Offutt Securities in Baltimore.

    ``They have a very close relationship with some of the major biotech and pharma companies in the world,'' and will try to build on Tech's contacts as well, Offutt said.

    One industry report, from CJS Securities in White Plains, N.Y., said West has 60-90 percent of the worldwide markets for its niche products like seals, closures and disposable components for syringes, intravenous products and blood collection.

    West has 50 locations around the globe, with sales of about $542 million in 2004.

    West will be acquiring Tech plants in Arizona, Michigan, Indiana, Puerto Rico, Mexico and Ireland, and said Tech's business and management team will remain headquartered in Scottsdale. The deal is subject to anti-trust review.

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