The Food and Drug Administration has rescinded Kirschner Medical Corp.'s right to export some of its orthopedic products, a move that could jeopardize the Timonium company's pending sale to Henley International Inc.
After inspecting Kirschner's plant in Fair Lawn, N.J., the FDA rescinded a certificate needed to export products made at the plant. The certificate assures foreign countries that there is no problem with manufacturing procedures, according to FDA spokeswoman Sharon Snider.
The FDA has not released details of the alleged problems. However, Ms. Snider says the FDA is not implying the products are unsafe.
Peter M. Graham, chief operating officer for Houston-based Henley, says he still hopes to reach a final agreement on the Kirschner sale by tomorrow but the action "obviously changes things."
"We are trying to get more information about the FDA action."
If the purchase goes through, Henley, which makes physical therapy equipment, will pick up $45 million worth of debt that threatens Kirschner's solvency.
"It is like getting a traffic citation for not wearing a seat belt," says Jeffrey Morris, an analyst with Josephthal Lyon and Ross of New York. "It is not a destructive thing, but it is annoying."
Products made at the Fair Lawn plant represent a fraction of Kirschner's total sales, Mr. Morris says.
Kirschner stock fell from $10.25 to $9.50 yesterday.
Kirschner officials were not immediately available for comment.