Ivax Will Sell Irvine-Based McGaw Unit

Troubled pharmaceutical concern Ivax Corp. plans to sell its Irvine-based McGaw unit for $320 million in cash, well below the $440 million it paid for the company three years ago.

B. Braun of America Inc., the U.S. subsidiary of Germany’s Braun Melsungen AG, will acquire McGaw, a major Orange County employer. Braun said it would pay up to $80 million more for the company over a period of years, depending on McGaw’s financial performance.

McGaw, a maker of intravenous solutions and related medical products, has nearly 3,000 employees. Most are in Irvine, but the company also has manufacturing operations in Texas and Puerto Rico, and distribution centers in other states. It had net revenue of $343 million and income from operations of $23 million in 1996.

Privately held Braun is the 14th-largest medical products company in the world, with annual net sales of more than $2 billion.

Caroll H. Neubauer, chief executive of Braun’s U.S. subsidiary, called McGaw “a perfect fit” with Braun’s U.S. disposable medical products operations. With the addition of McGaw, Braun of America will have total net sales of more than $600 million annually, “and will constitute a significant force in the U.S. medical products industry,” Neubauer said. Braun’s U.S. subsidiary is based in Bethlehem, Pa.

The announcement comes just two months after the collapse of Ivax’s proposed $1.65-billion merger with Orange-based drug wholesaler Bergen Brunswig Corp. That setback was the latest in a string of problems for the Miami-based company, including a series of quarterly losses, a tumbling stock price and layoffs in its generic-drug operations.

“There’s been a real downturn in the generics market because of excess supply,” said analyst John M. Eade at Argus Research in New York. “It has hurt their revenues and earnings tremendously, and dramatically weakened their financial condition.”

Ivax said the McGaw sale is part of its strategy of refocusing on its core pharmaceutical business.

“McGaw is a solid, well-run company with an outstanding work force, but it simply does not fit with Ivax’s new strategic profile,” said Ivax President Robert C. Strauss.

The transaction, which is subject to the usual regulatory review and other conditions, is expected to be completed in June. Ivax said it would use the cash to pay off its existing revolving credit facility.