Philips strengthens medical systems unit by acquiring HSG

Dutch electronics major,
17 November 2000

Dutch electronics major, Philips, gave its medical systems business a big boost when it acquired, for an estimated $1.7 billion, Healthcare Solutions Group (HSG) belonging to Agilent Technologies, the US supplier of test and measurement equipment.

HSG, which is developing tools for telemedicine, where a patient can remain at home while data on the patient's condition is fed through phonelines, is expected to allow Philips to strengthen its position in diagnostic imaging and enter the market for patient monitoring. The acquisition will also help increase Philips' reach in the north American healthcare market.

HSG was sold by Agilent – a unit spun off from from Hewlett-Packard a year ago – due to persistent losses pursuant to a weak demand. Philips, however, is confident that HSG will contribute to earnings in the second year after the deal has been completed, since restructuring is already underway, in which 9 per cent of the 5,000 staff are being shed.

Earlier this week, Philips had agreed to pay $426 million for the Nasdaq-listed Adac Laboratories, a leader in nuclear imaging systems used mainly in diagnosing heart disease and cancer.

The deal is subject to regulatory approval.