Respironics Board Endorses $5.1 Billion Bid from Philips

MURRYSVILLE, Pa.–Respironics’ board of directors has endorsed a
$5.1-billion bid by Royal Philips Electronics to acquire the sleep
and respiratory equipment maker.

Netherlands-based Philips has offered $66 per share for
Respironics, a more-than 20 percent increase above the company’s
recent closing prices. The deal is expected to close some time in
the first quarter of 2008, pending approval from shareholders and
regulators.

Philips said the acquisition would make it a leader in the
global home health care space and in the fast-growing field of
obstructive sleep apnea management and home respiratory care. The
deal will also strengthen its in-hospital position given
Respironics’ non-invasive ventilation and respiratory monitoring
products for hospitals and clinics, the company said.

“A core part of Philips’ health care strategy is to take a
leading position in the high-growth sector of home health care,”
Steve Rusckowski, CEO of Philips Healthcare and a member of the
board of management of Royal Philips, said in a statement. “This
acquisition, with its significant strategic and financial benefits
to Philips Healthcare, is another important step in carrying out
this strategy.”

For the 12-month period ended Sept. 30, Respironics reported
sales of approximately $1.2 billion. In its last five fiscal years,
the company has seen revenues grow at a rate of 19 percent. Almost
three-quarters of its sales come from the company’s sleep and home
respiratory business, which includes diagnostic and therapeutic
devices for sleep disordered breathing and chronic respiratory
diseases.

According to Philips, growth in the global respiratory market is
expected to be at least 10 percent a year going forward, and the
market for global sleep apnea management in particular is expected
to show a mid-teen percentage growth rate annually as rising
awareness of the condition leads to increasing diagnosis and
treatment of OSA.

Respironics’ respiratory management portfolio is also
synergistic with Philips’ current offerings in patient monitoring,
from pre-hospital admission to long-term disease management in the
home. The combined businesses will profit from cross-selling
opportunities, according to Philips.

Upon completion of the acquisition, Respironics will become the
centerpiece of Home Healthcare Solutions, which will form part of
Philips Healthcare.

The Respironics deal is one of a steady stream of U.S.
acquisitions by Philips’ medical arm, according to press reports.
Last month, the company bid $619 million for Maryland-based Visicu,
which makes patient monitoring equipment. In 2006, Philips
announced the acquisition of Lifeline Systems, and Health Watch and
Raytel Cardiac Services, a Connecticut-based home heart-monitoring
service, were added last year. The company said its Home Healthcare
Solutions currently supports almost one million at-risk seniors,
either in their own homes or in senior living facilities throughout
the U.S. and Canada.

“The combination of Respironics and Philips will allow us to
continue to provide exceptional products and services to our
customers and allow Respironics to expand its leadership in the
global sleep and respiratory markets” said Respironics President
and CEO John L. Miclot. “Philips is the right partner to create
additional growth opportunities for our company, and we believe
that our company will benefit significantly by being part of a
larger, growing and dynamic organization.”

Respironics has approximately 5,300 employees worldwide.