Philips to buy US Respironics
Philips Electronics NV is to buy US medical products company Respironics Inc for e3.6 billion ($5.2 billion), its biggest ever acquisition, as it expands in the fast-growing healthcare sector.
Philips, the world’s biggest lighting maker, a top three hospital equipment maker and Europe’s biggest consumer electronics producer, said on Friday it is paying $66 per share in cash for Pennsylvania-based Respironics — a 24 premium to its closing price of $53.11 on Thursday.
It is Philips’s second acquisition in the medical products sector this week after its $430 million purchase of US medical systems and service provider Visicu Inc on Tuesday.
Philips’s medical products division, which competes with GE Healthcare and Siemens Medical Solutions, is key to its strategy of becoming a higher margin company.
It is reorganising its business to focus on its three core businesses after selling its semi-conductor unit last year. A series of acquisitions in recent weeks included the purchase of second-ranked US lighting fixtures maker Genlyte for $2.7 billion. Over the past 2-1/2 years Philips has made just over e10 billion in acquisitions.
Fair price
Philips is paying a fair price for its latest acquisition, said some analysts. “They are paying four times forecast 2007 sales. I can be happy with this number,” said analyst Wing Yen Choi at brokerage Theodoor Gilissen.
He said Philips had paid seven times sales for Visicu. Philips shares were up 0.6% at e30.88 by 0857 GMT versus a 1% rise in the Amsterdam blue-chip index. The stock hit a two-month high on Wednesday after it said it would buy back e5 billion of shares in the next two years.
The Respironics transaction, which is expected to close in the first quarter of 2008, will immediately add to sales growth and earnings before interest, tax and amortisation (EBITA) margin to Philips and its healthcare unit, Philips said. Respironics’s board of directors is backing the deal, Philips said in a statement.
Respironics — which makes ventilators and respiratory drug delivery products and technology — posted sales of about $1.2 billion in the 12-months to September, with an earnings before interest, tax and amortisation (EBITA) margin of 19%.
Its sales have grown at a compound annual growth rate of 19% in the last five years. Philips said it expects the $5 billion global respiratory market to grow by at least 10% yearly.
“The acquisition of Respironics is another major milestone towards the completion of our objective to build market leadership positions in high-growth, high-margin businesses across the three market sectors of healthcare, lighting and consumer lifestyle,” said Gerard Kleisterlee, chief executive of Philips.
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