Sunrise announced that they have divested their US and South America Guardian business. (by the way the Guardian brand was never strong in their European business).

Sunrise CEO Michael N. Cannizzaro said:

For Sunrise Medical this is an important step in our strategy of being the industry’s leading Mobility and Seating Company. We will work closely with Medline to insure a smooth and seamless transition for all of our valued customers

Medline DME Division President said:

The acquisition of the Guardian line marks a significant step forward in the growth and value-added development of our Durable Medical Equipment division,” said Dave Jacobs, president, Medline Durable Medical Equipment division. “Guardian has a long-standing reputation for excellence and innovation in the healthcare industry and we are very pleased to have the opportunity to build on that tradition. In addition to bolstering our competitive position in the marketplace, the acquisition of this highly respected brand expands the range of products, services and value we can offer our customers

My take on this is that this move represents the next stage in industry (re) focus. Sunrise, a former pure play manufacturer, has chosen to exit a lower value added business that is increasingly dominated by people that have been smart in terms of how they source product from Asia. Medline has considerable expertise in this area.

Of interest perhaps is that this was conducted under Michael N. Cannizzaro’s watch. He was hired in 2007 by Vestarcapital partners – private equity shareholder of Sunrise. At about the same time Sunrise had been split into two parts – namely their respiratory business and wheelchair and other businesses.

Vestarcapital had taken Sunrise private in 2000 and speculation is that they may be looking for an exit.

Last week I wrote about Handicare, a relatively highly differentiated European based rehab company that is rapidly reaching the revenues of Sunrise, that acquired Linido, a relatively low value patient aid business last week.

Interesting…

(Update below)

Or perhaps, why has it taken so long.

The homecare market has several business segments, ranging from care services to ambulatory home dialysis, lower value home patient aids, wheelchairs as well as higher margin and faster growing segments like respiratory and diabetic care.

One of these segments is sleep therapy. Sleep apnea is being increasingly diagnosed (and increasingly easier to be diagnosed) in larger numbers of patients. The principle treatment is a CPAP (and variations) machine which essentially minimizes periods of apnea during sleep – a syndrome that not only effects a persons ability to function 100% during the day but also has been clearly shown to increase the risk of heart disease and premature death.

Some companies that sell respiratory products into the home, segment their business according to oxygen therapy and sleep therapy. CPAP falling into the later category.

Oxygen therapy (oxygen concentrators, liquid oxygen) is slower growing and tends to follow population growth while sleep therapy is fast growing.

At the end of 2007 Phillips acquired Respironics – a leading full line respiratory products company – to enter the homecare space. This provided them the opportunity of entering the homecare medical business at the higher value end. Speculation immediately followed as to how long it would take for Resmed, Respironics prime competitor in the sleep business to be snapped up.

According to this press report out of Australia (the home of Resmed founder – Peter Farrell), Linde, German gasses multinational is rumored to be in talks to acquire Resmed.

Synergies are clear – combine the medical gasses business with the high growth and margin medical homecare segment and strengthen their homecare presence.

If this one does not happen another one will – soon.

Update July 1, 2008:

Resmed have reacted to the market rumor by issuing the following statement on on the Australian stock Exchange:

“ResMed notes the comments in the Age and Australian Financial Review newspapers published today, 1 July 2008 to the effect that the company “is being stalked by German industrial and medical gases giant the Linde Group” (Age) and to “rumours of an agreed
cash bid” (AFR) under the headline “Sceptics doubt ResMed rumour”.The company confirms that it is not aware of any information that would require disclosure to the ASX in terms of listing rule 3.1.

Further, the company has a policy of not commenting on market rumours.”

The market likes the rumor anyway??

Resmed is trading at $38.34 up 7.7% at time of writing July 1, 2008

http://finance.yahoo.com/q?s=RMD