Greatbatch Going Into Expansion Phase

Greatbatch Inc. chief executive Thomas J. Hook is gearing up for a shopping spree.

After spending much of the last three years reshaping and streamlining its operations, including the construction of new plants in Alden and Mexico, the Clarence-based medical components manufacturer is heading into what Hook hopes will be an expansion phase.

Armed with roughly $400 million in cash and borrowing capacity, Greatbatch executives are on the hunt for small firms that can extend the company’s product line or push it into complementary markets.

“We’re looking, over the next two or three years, to deploy these assets,” Hook said Tuesday following Greatbatch’s annual shareholder’s meeting. “We’re finishing up the optimization phase.”

That phase saw Greatbatch consolidate seven of its facilities, while building a new battery manufacturing plant in Alden and an assembly plant in Tijuana, Mexico. Along the way, Greatbatch shifted all of its research and development work to the Buffalo Niagara region and is in the final stages of closing plants in Carson City, Nev., and Columbia, Md., and shifting that work to Mexico.

Greatbatch expects to start building a new factory in suburban Boston, Mass., within a few months that will double the capacity of its fast-growing commercial power supply business.

Those moves, which involved the relocation of operations that produce 70 percent of the company’s $271 million in annual sales, are expected to save Greatbatch about $10 million a year.

Those savings and the improved efficiency resulting from the restructuring moves are expected to help Greatbatch, which followed up on a 29 percent jump in 2006 earnings per share with a 3 percent increase in adjusted first-quarter earnings per share, boost its profits for all of this year by about 24 percent to $1.45 per share.

The next phase for Greatbatch is to invest in new products and technology — either developed internally or acquired through acquisitions — that will help the company make more complex component systems, while adding new product lines and diversifying its markets, Hook said.

That push already has led Greatbatch to buy Cleveland-based Biomec Inc. in an $11.4 million deal

that gives Greatbatch control of a developing coatings technology that can be used on medical devices to reduce the risk of clotting, inflammation and infection.

Greatbatch earlier this month agreed to pay $102 million to buy Enpath Medical, a suburban Minneapolis company that makes a line of advanced catheters that can be used to reach parts of a patient’s body that normally can’t be reached by traditional catheters, along with products that help doctors insert them. That deal, which will add about $40 million to Greatbatch’s sales, is expected to close by the end of June.

Hook expects even more deals to come, focusing mainly on companies with sales of less than $100 million.

“We’re looking for smaller, single product line or dual product line companies,” he said. “They must have core technology, good intellectual property and be within targeted markets.”

Plus, any acquisition will have to add to Greatbatch’s profits. “We’re not going to be foolish,” Hook said. “We’re not going to do a bad deal.”

SOURCE: THE BUFFALO NEWS