Dutch healthcare conglomerate Royal Philips recently announced the purchase of the US company Spectranetics. The U.S. maker of devices to treat cardiac disease is valued at around EUR 1.9 billion and manufactures, among other things, venous catheters and medical laser devices. In addition, over the next two years Philips intends to repurchase its own stock worth up to EUR 1.5 billion to finance the deal.
Philips can rely on a well-filled financial cushion. The sale of the LED component business Lumileds and the spinning off of the lighting division Philips Lighting last decreased its cash reserves.
Some analysts think that the relatively high purchase price for Spectranetics will hurt the stock market. Philips offered $38.50 per share in cash, an increase of 27 percent to the closing price of the previous day. Based in Colorado, the company has more than 900 employees and plans to increase sales to $306 million this year.
Philips expects to close the acquisition in the third quarter. The business is expected to have an impact on earnings in the coming year. Already two years ago, Philips had taken over the company Volcano, which is rumbling in a similar area.
“With the ongoing sell down of light and the soon-to-be-sold majority in Lumileds, Philips is able to make the next move in its health-care strategy,” Marcel Achterberg, an analyst at Degroof Petercam, said in a note. “Acquisitions should boost the growth rate.”
Philips CEO Frans Van Houten told journalists that there is no connection between the acquisition of Spectranetics or the repurchase of shares and reports of an alleged interest of activist investors to Philips. Both measures had been planned before the relevant press release had made the round. It was reported that the activist investor Third Point is targeting Philips. According to Van Houten, there is no contact with the investor, which became known as early this week, with the Swiss food producer Nestle.
Philips has been rebuilding for years. The company, formerly known as a manufacturer of entertainment electronics, now focuses on medical technology and consumer goods such as electric toothbrushes, shavers and household appliances. Last year, Philips introduced the sale of its LED components business Lumileds to be completed this week. The financial investor Apollo Global Management had a roughly 1.5 billion dollars. In addition, the Group had split off its subsidiary Philips Lighting and brought it to the stock exchange.
