The world's biggest manufacturer of patient-monitoring systems Royal Philips Electronics NV has agreed to buy US medical-device maker Respironics Inc for €3.6 billion, its biggest-ever acquisition. Philips will pay $66 a share in cash, a 24 per cent premium to its closing price on Thursday 20 December.
Respironics, based in Murrysville, Pennsylvania, makes devices that treat chronic breathing disorders and aid sleep. The deal values Respironics at 36.3 times its earnings for the past year, above the industry average PE multiple of 27.7 for medical-device makers.
With this deal, Philips has gone in for more than €10 billion in acquisitions since 2005. Chief Executive Officer Gerard Kleisterlee is using proceeds from selling its semiconductor holdings to bolster the medical and lighting divisions, as well as return cash to shareholders.
Kleisterlee said earlier this year that Philips would have €20 billion available for acquisitions, dividends and buybacks over the next three years. On 26 November, the company announced a $2.7 billion takeover of lighting-fixtures manufacturer Genlyte. On Tuesday, the company said it would buy back €5 billion worth of stock in the next two years.