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Originally published November 3, 2011 at 10:00 PM | Page modified November 3, 2011 at 10:11 PM

SonoSite is said to seek buyers, hold talks with Samsung

Bothell-based SonoSite, a maker of bedside ultrasound and cardiograph equipment, has hired JPMorgan Chase & Co. to advise it on a possible sale, said people with knowledge of the matter. The report pushed its stock up nearly 30 percent Thursday

Bloomberg News

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SonoSite is up for sale and the Bothell maker of bedside ultrasound and cardiograph equipment is in talks with potential buyers including Samsung Electronics, said three people with knowledge of the matter.

The report pushed SonoSite's stock up $9.17, or nearly 30 percent, to $39.95 Thursday, the most in 13 years.

SonoSite, with a market value of $427 million as of Wednesday, hired JPMorgan Chase & Co. to advise it on a possible sale, said the people, who declined to be identified because the talks are private. SonoSite is asking for second-round bids and aims to reach a sale agreement by mid-December, one of the people said.

Marcus Smith, SonoSite's chief financial officer, didn't return a call requesting comment. Tasha Pelio, a JPMorgan spokeswoman, declined to comment.

SonoSite is attracting interest from bidders looking to expand in medical equipment, an area that may grow as the proportion of elderly in markets from the U.S. to Europe and Japan climbs and health-care providers seek to reduce costs through better diagnostic technology.

"It doesn't surprise me that SonoSite management is making overtures to larger acquirers at this stage," in part because the company will lose patent protection on its hand-carried ultrasound devices in 2016, said Alan Robinson, an analyst at RBC Wealth Management in Seattle.

"As their patent portfolio starts to come up to expiry, I think management will be increasingly focused on maximizing their technological lead, and to do this, I think they'll need a deeper-pocketed partner," Robinson said.

SonoSite introduced an improved hand-carried ultrasound system and a new cardiograph tool this year. In the third quarter, the company's research and development costs rose 27 percent from a year earlier to $10.7 million while its profit fell 24 percent to $720,000.

Jason Kim, a Seoul-based spokesman for Samsung, said, "Samsung continuously reviews various business opportunities." But he added, "we don't comment on speculation or rumors about our business."

Samsung Chairman Lee Kun Hee plans to build the company's medical-equipment business into one that generates $8.8 billion in annual sales by 2020 as overall revenue growth slows. The company, which doesn't break out medical-equipment revenue, is in talks to buy makers of MRI scanners and X-ray machines to challenge General Electric and Siemens in medical equipment, Senior Vice President Jo Jae Moon said in an interview in July.

The Suwon-based company is making a push into an industry led by General Electric, which had $16.9 billion of revenue from health care last year, according to data compiled by Bloomberg. Siemens had $17 billion in revenue from medical solutions in 2010, a 3.4 percent increase.

Johnson & Johnson, the world's second-biggest seller of health products, agreed in April to buy Synthes, a maker of medical tools to treat damaged bones, for $21.3 billion. The deal would make New Brunswick, N.J.-based J&J the leader in the $5.5 billion market for devices that treat trauma victims.

Information from Bloomberg News reporters Jun Yang in Seoul, Elizabeth Lopatto in New York and Molly Peterson in Washington is included in this report

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