Natus Medical to Acquire Bio-logic Systems

Business Wire, Oct 17, 2005

SAN CARLOS, Calif. & MUNDELEIN, Ill. -- Natus Medical Incorporated (Nasdaq:BABY) and Bio-logic Systems Corporation (Nasdaq:BLSC):

--Acquisition Expands Distribution and Adds Growth Opportunities

--Closing Targeted for Early January

--Expected by Natus to be Accretive in 2006

Natus Medical Incorporated (Nasdaq:BABY) and Bio-logic Systems Corporation (Nasdaq:BLSC) today announced that the companies have entered into a definitive agreement for Natus to acquire Bio-logic in a cash merger. Mundelein, Illinois based Bio-logic develops and markets computer-based electro diagnostic systems and disposable supplies used by medical practitioners to aid in the detection, diagnosis and monitoring of certain hearing, neurological and sleep disorders.

Natus has agreed to acquire all outstanding shares of Bio-logic common stock for $8.77 per share. In addition, each share subject to a Bio-logic stock option will convert into an amount equal to the excess of $8.77 over the exercise price of the option. Based on the number of Bio-logic shares and options outstanding at October 1, 2005, the total consideration would amount to approximately $66 million. In Bio-logic's most recent quarterly report for the quarter ended August 31, 2005, it reported $15.3 million dollars of cash on its balance sheet.

The agreement has received the approval of the Boards of Directors of both companies and is subject to the approval of Bio-logic stockholders and customary closing conditions. The members of the Board of Directors of Bio-logic have entered into voting agreements by which they have agreed to vote approximately 16% of the outstanding Bio-logic common stock in favor of the merger agreement. The Board of Directors of Bio-logic has received an opinion from its financial advisor, Dresner Securities, Inc., that the merger consideration to be received by the holders of Bio-logic common stock is fair, from a financial point of view, to those holders. The parties expect the acquisition to be completed in early January 2006.

Jim Hawkins, President and Chief Executive Officer of Natus, commented, "This acquisition will further strengthen our position as a market leader in the development of products for the detection, treatment, monitoring, and tracking of common disorders in newborns and children. We will be supplementing our hearing business with the addition of Bio-logic's leading diagnostic hearing products and expanding our presence in the Audiology market through their established distribution channels, both in the U.S. and internationally."

"At the same time, this will open up new market opportunities for Natus in the areas of EEG monitoring for neurology and in the growing diagnostic sleep market," added Hawkins. "Bio-logic's neurology products, which were developed in collaboration with leading U.S. children's and adult epilepsy hospitals, are used for epilepsy and seizure monitoring. The Sleepscan(TM) product line is one of only a few product offerings in the sleep monitoring market with the capability to monitor young children along with the traditional adult segment. This acquisition will also bring together our engineering teams who will now be able provide world-class solutions for our growing customer base."

"Finally, this acquisition is consistent with our previously communicated goals to grow the business through internal product development, increased penetration into expanding international markets, and through strategic acquisitions that will be accretive to our earnings. Bio-logic has consistently maintained a gross profit percentage of approximately 65% and we fully expect this acquisition to be accretive in 2006," stated Hawkins.

Gabriel Raviv, Chairman and Chief Executive Officer of Bio-logic, said, "I believe the expanded opportunities provided through this acquisition will accelerate sales of our technologies into the marketplace and will benefit both our employees and customers."

Natus will finance a portion of the purchase price through its existing cash, including $7,128,000 that the Company will receive this week from the D3 Family Funds through a private placement of 600,000 shares of the Company's stock. In addition, Natus has secured from Wells Fargo Bank N.A. a loan commitment, subject to customary closing conditions, to provide $10 million in a senior secured credit facility. Natus will also use cash on the Bio-logic balance sheet for a portion of the acquisition cost.

Conference Call

Natus has scheduled an investor conference call to discuss this announcement beginning at 11:00 a.m. Eastern Time today. Individuals interested in listening to the conference call may do so by dialing 800-901-5218 for domestic callers, or 617-786-4511 for international callers, and entering reservation code 73305685.

About Bio-logic Systems

Bio-logic Systems Corp., headquartered in Mundelein, Illinois, designs, develops, assembles and markets computer-based electrodiagnostic systems and related disposables for use by hospitals, clinics, school districts, universities and physicians. The systems conduct tests that are typically used by medical practitioners to aid in the diagnosis of certain neurological disorders, brain disorders and tumors, and sensory disorders, including audiological and hearing screening and diagnosis.