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.
