Agfa's graphics business could be a stopping point for a possible takeover by German medical software company CompuGroup.

While the medical interests of the two appear complementary, analysts say the question of "what to do with Agfa Graphics" and the group's pension liabilities - reported to stand at 1.25 billion Euros - could stand in the way of a deal.

Agfa responded to what it called "media speculation" with a statement confirming that it had been approached by CompuGroup Medical SE, which had indicated an interest in potentially acquiring all its issued shares. "The board of directors of Agfa, together with its financial and legal advisors, will carefully evaluate CompuGroup's expression of interest, taking into account the interests of its shareholders and other stakeholders," the statement says.

"There is no certainty as to whether a public offer for all issued and outstanding shares of Agfa will materialise." It would make further announcements, "if and when circumstances so require".

The news has led to a six per cent rise in the value of Aga's shares, while those in CompuGroup fell 3.7 per cent. Agfa's market value is reported to have shrunk by a third to 616 million Euros this year.

Claiming to be the first company to introduce X-ray films to the market, Agfa now makes both analogue and digital imaging systems, plus those for diagnosis and communications systems, with technology used in more than half of the world's hospitals. Its medical IT products potentially complement CompuGroup's X-ray machines and software for doctors' surgeries, pharmacies and hospitals.

But where does Agfa Graphics fit into the picture? Its domestic film and camera business was sold off a decade ago, and its graphic arts interests are currently dominated by large-format inkjet.

Its printing plates and Polaris CTP systems account for a large proportion of the newspaper market, but this is a mature market in most countries and diminishing pagination and circulations have led to a reduction in demand.

Earlier this month, Agfa announced that it would shut its plate manufacturing factory in Vallese, Italy, one of seven worldwide, weaker market demand in Europe.