In Home Healthcare Leadership Bid, Philips To Acquire Respironics for $5.1 Billion

In a move that would elevate the company to leadership ranks in the fast-growing home healthcare sector, Philips, already a major player in the medical imaging and patient monitoring sectors, has agreed to acquire Respironics, a market leader in the respiratory care sector, for a total price of US$ 5.1 billion.

The home healthcare market is expected to grow at a very robust pace, at rates sufficient to focus the attention of companies in the healthcare business to that sector. Philips' Home Healthcare business already supports nearly a million seniors in their homes or living facilities in the US and Canada alone. With the Respironics acquisition, Philips intends to strengthen its home healthcare offerings by adding new product categories, and benefit from the cost synergies derived from the merger. In addition, the Respironics deal is well inline with Philips' earlier acquisitions of home healthcare companies such as Lifeline Systems, Health Watch, and Raytel Cardiac services.

Respironics is a world leader in the treatment of Obstructive Sleep Apnea (OSA), a disorder typified by the repeated cessation of breathing during sleep. The number of OSA sufferers in the US has been estimated at 18-20 million, only about a fifth of which have been diagnosed. Recent research points to a link between OSA and stroke, heart disease, and diabetes. Respironics is also well placed in noninvasive ventilation in the home market segment as well as invasive and noninvasive ventilation, respiratory monitoring, neonatal products, and respiratory drug delivery in the hospital sector.

Philips will acquire all outstanding shares of Respironics for approximately US$5.1 billion in cash--almost a third above the Respironics average closing share price. Upon closing, Respironics will become the headquarters for the Home Health Care Solutions group within Philips Healthcare, and Respironics' senior operating management is expected to remain and continue to lead the business. The transaction, subject to customary conditions, is expected to close during the first quarter of 2008. Industry analysts have praised the acquisition as a good strategic move.

Steve Rusckowski, CEO of Philips Healthcare and member of the Board of Management of Royal Philips said, "A core part of Philips' healthcare strategy is to take a leading position in the high-growth sector of home healthcare.”

Respironics (Murrysville, PA, USA; www.respironics.com) is a developer, manufacturer and distributor of products that serve the sleep and respiratory markets. With net sales of $1.2 billion in 2007, Respironics markets its products in over 140 countries and employs over 5,300 people worldwide.

Royal Philips Electronics (Amsterdam, The Netherlands; www.philips.com) is a global leader in healthcare, lighting and consumer lifestyle products. Philips employs about 128,000 people in over 60 countries worldwide. With sales of about $40 billion, the company is a market leader in medical imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics.

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