Philips to acquire MRI component and accessory manufacturer
22 June 2006
Amsterdam, The Netherlands. Royal Philips Electronics
(NYSE:PHG) has strengthened its position in the magnetic resonance imaging
(MRI) market with the acquisition of Intermagnetics General Corporation
(NASDAQ:IMGC), one of the leading manufacturers of MRI magnets and other
devices. Philips will also move its MRI headquarters to the company's base
in New York.
Philips will acquire Intermagnetics for US$27.50 per share or a total equity
value of approximately US$1.3 billion (€1
billion) to be paid in cash upon completion. The Board of Directors of
Intermagnetics has unanimously approved the proposed transaction. Completion
of the transaction is subject to regulatory approval, to the terms and
conditions of the merger agreement and to the approval of Intermagnetics'
Intermagnetics develops, manufactures and markets high-field
superconducting magnets used in Magnetic Resonance Imaging (MRI) systems and
is viewed as the technological innovator in this market. Intermagnetics also
provides specialized MRI compatible patient monitoring devices and radio
frequency (RF) coils that are predominantly supplied to hospitals.
acquisition of Intermagnetics will strengthen Philips' position in the key
market of magnetic resonance imaging. It will allow Philips to significantly
rationalize its supply chain, to enhance its competitive position and to
participate in the fast growing market for RF coils. Philips anticipates the
transaction to be accretive to its operating margin towards the end of 2007.
There will be a one-time charge of approximately
€85 million related to in-process R&D
expenses, integration of supply chain and various purchase accounting items,
taken in the latter half of 2006. For the last four quarters ended February
26, 2006, Intermagnetics' revenues were US$ 304 million.
acquisition, we will greatly strengthen the overall performance and
innovation capability of our MRI business," said Jouko Karvinen, member of
the Philips Board of Management and CEO of Medical Systems. "In the short
term, we expect to gain equipment market share and to grow the installed
base by expanding our product offerings with an accelerated innovation rate
and a lower cost supply chain. Intermagnetics' leading positions in the
high-growth and high-value markets of RF coils and MRI patient monitoring
will enable us to build unique solutions for our customers," he added. "In
the longer term, we believe that MRI technology will become important in
molecular imaging, therefore, positioning us well for the future."
also recognizes the benefits offered by the breakthrough technology of
SuperPower, Intermagnetics' Energy Technology subsidiary, and will actively
consider the most effective way to achieve its potential.
Epstein, chairman and chief executive officer of Intermagnetics General
Corporation said: "Our Board of Directors unanimously feels that this is the
logical next-stage for Intermagnetics. We will now be better positioned to
align our core strengths in the design and manufacture of superconducting
magnets, RF coils and MRI compatible patient monitors with Philips' deep
expertise in MRI system design and clinical applications. This is truly a
unique opportunity where another clear winner is the MRI business in
Intermagnetics employs approximately 1,150 people. Its
headquarters in Latham, New York will become the global headquarters of
Philips' enlarged magnetic resonance business. Upon completion of the
acquisition, Glenn H. Epstein will join Philips to lead the MRI business and
the integration process. He will report to Steve Rusckowski, CEO of Philips
Medical Imaging Systems.
Magnetic Resonance Imaging is one of the key
imaging technologies in radiology departments in hospitals. In 2005, the
total MRI market was approximately €5
billion, and consisted of MRI systems, services and accessories (such as RF
coils). Over the past 10 years, the number of MRI procedures grew on average
by 10% per year. This has been driven by an increasing number of diagnostic
applications. Magnetic resonance imaging is radiation free, and is the
preferred technique for high-resolution imaging of the brain, spine,
abdomen, breast, prostate, blood vessels, and of all joints in the body.