Royal Philips, a Dutch health-technology company, announced on Wednesday that it is buying Spectranetics Corp., a U.S maker of devices to treat cardiac disease, for 1.9 billion euros, or 2.15 billion dollars, as the Dutch company strengthens its growing healthcare business.
Philips, an Amsterdam-based company, said that it would begin a tender offer to acquire all the issued and outstanding shares of Spectranetics for $38.50 a share, to be paid in cash upon the completion. The implied value of 1.9 billion euros is inclusive of Spectranetics’ cash and debt, and that is a 27% premium to the Spectranetics’closing price on Tuesday.
At the current share price, the buyback program represents a total of approximately 46.1 million shares. Philips plans to start the program in the third quarter of 2017, and complete it in two years. As the program will be initiated for capital reduction purposes, Philips intends to cancel all of the shares acquired under the program.
Healthcare is Philips’ largest business and it has been on the hunt for acquisitions to expand it. Philips spun off its lighting business last year as part of the shift to health.
The acquisition of Spectranetics is expected to further expand and strengthen Philip’s Image Guided Therapy Business Group.
“The transaction is expected to be revenue growth and profit
by 2018, given the projected revenue
and productivity synergies,” said Philips CEO Frans van Houten. accretive
The board of directors of Spectranetics has approved the transaction and recommends the offer to its shareholders.
“Our capital allocation policy aims for a balanced mix of investments in organic and inorganic growth opportunities, actions to drive balance sheet efficiency and returns to shareholders,” Houten added.
Upon completion of the transaction, Spectranetics and its more than 900 employees will become part of the Image-Guided Therapy Business Group within Philips.
Meanwhile, Spectranetics is known for using techniques including lasers and tiny drug-covered balloons to clean the insides of veins and arteries that have become clogged due to heart disease. The company also makes so-called image-guided therapy devices to treat cardiac and peripheral vascular disease. One product, laser
catheters, atherectomy blockages with laser energy both coronary and peripheral
arteries, Philip said. treat
competitive product range, integrated with our portfolio of Interventional
Imaging Systems, devices, software and services will enable clinicians to
decide, guide treat and confirm the appropriate cardiac and peripheral vascular
treatment to deliver enhanced care for patients with better outcomes, as well
as significantly boost recurring revenue streams for Philips.” Spectranetics’
The combined Spectranetics and Philips Image Guided Therapy Devices business within Image-Guided Therapy Business Group, is expected to grow to approximately 1 billion euros by 2020.
However, Philips shares closed at 32.54 euros each in Amsterdam Tuesday after declining around 0.79% on the session and trimming the year-yo-date gain just over 12.2%.
By 4:59 GMT-4, Spectranetics Corp.
1.30%, or 0.40, to $30.40. It opened in $30.80, with a session
high of $30.95, and a session low of $30.10. Its market capitalization was $ traded 33
By 10:05 GMT+2, Koninklijke Philips NV traded 0.83%, or 0.27, to 32.27 euros. It opened in 32.34 euros, with a session high of 32.46 euros, and a session low of 32.06 euros. Its market capitalization was 30.36 billion euros, its P/E ratio was 25.32, and its dividend yield was 2.48%.
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