Philips Agrees To Buy Respironics For EUR3.6 Billion

Royal Philips Electronics (PHG) of The Netherlands Friday said it would acquire U.S.-based health care firm Respironics Inc. (RESP) for EUR3.6 billion, or $5.1 billion, in cash.

In joint statements, the companies said they had reached a definitive merger agreement under which Philips will acquire all of Respironics' outstanding shares for $66 a share.

Respironics, of Murrysville, Pennsylvania, is a leading provider of sleep therapy and respiratory health care solutions, and the deal places Philips as a global leader in the fast-growing home health-care market by adding new product categories in obstructive sleep apnea and home respiratory care to its existing businesses in this field.

Respironics has approximately 5,300 employees worldwide.

"Respironics is an excellent strategic fit and will significantly drive our growth in health care both in the hospital and in the home," said Gerard Kleisterlee, president and chief executive of Royal Philips Electronics in a statement. "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 health care, lighting and consumer lifestyle."

Cost synergies expected from this transaction will be primarily based on supply chain optimization and savings in general, and administrative expenses including IT related synergies to be achieved by leveraging Respironics' IT infrastructure, Philips said.

The combined businesses will profit from cross-selling opportunities leveraging Philips' strengths in the hospital and the home. The transaction will be immediately accretive to revenue growth as well as Ebita margin to Philips and Philips Healthcare.

Over a 12-month period ending in September, 2007, Respironics reported sales of approximately $1.2 billion with an Ebita margin of 19%.

The tender offer is expected to commence by Jan. 8, 2008, and is not subject to any financing contingency. The acquisition will be effected pursuant to a merger agreement and is subject to the terms and conditions of that agreement.

These include the tender of a majority of the outstanding Respironics shares, as well as customary U.S. and European Union regulatory clearances. The transaction is expected to close in the first quarter of 2008 upon which Respironics will become the headquarters for Philips Home Healthcare Solutions group within Philips Healthcare.

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