Philips acquires Respironics for $5.1bn

8 January 2008

Respironics, a US maker of sleep disorder devices, has agreed to a takeover by Royal Philips Electronics (Philips) for approximately US$ 5.1 billion. The offer price represents a premium of approximately 31% over Respironics' recent closing share price. The transaction is expected to be completed in the first quarter of 2008. The deal is the third healthcare acquisition by Philips in December 2007, following the takeovers of US clinical systems suppliers Visicu and Emergin.

Respironics is a global leader in the treatment of obstructive sleep apnea (OSA), a sleep disorder characterized by the repeated cessation of breathing during sleep. It is estimated that in the United States alone there are 18-20 million sufferers of moderate or severe OSA of which only 15-20% have been diagnosed. Research in recent years has shown a link between OSA, heart disease, stroke and diabetes.

The company also has a leading position in noninvasive ventilation and has recently introduced new home oxygen technologies to serve the needs of respiratory impaired patients in the home. The remainder of the company's business is focused on the hospital channel and includes noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug delivery technologies for the treatment of respiratory diseases.

Upon closing, Respironics will become the headquarters for Philips Home Healthcare Solutions group within Philips Healthcare, and Respironics' senior operating leadership are expected to remain with the organization and will continue to lead and manage the business.

Philips has made a number of recent acquisitions in the area of home healthcare, including Lifeline Systems, Health Watch and Raytel Cardiac Services. Today, Philips Home Healthcare Solutions supports almost one million at-risk seniors, either in their own homes or in senior living facilities throughout the US and Canada.

"A core part of Philips' healthcare strategy is to achieve a leading position in the high growth sector of home healthcare," Steve Rusckowski, Chief Executive Officer of Philips Healthcare and member of the Board of Management of Philips Electronics, said. "This acquisition, with its significant strategic and financial benefits to Philips Healthcare, is another important step in carrying out this strategy." Upon completion of this acquisition, Respironics will become the centerpiece of Home Healthcare Solutions, which will form part of Philips Healthcare as of January 1, 2008.

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