Royal Philips and Volcano Corporation have entered into a definitive merger agreement. Pursuant to the agreement, Philips will commence a tender offer to acquire all of the issued and outstanding shares of Volcano for US$18 per share, or a total equity purchase price of US$1bn, to be paid in cash upon completion. The board of directors of Volcano has unanimously approved the transaction and recommends the offer to its shareholders. The transaction is expected to close in the first quarter of 2015.
Philips has a portfolio of interventional imaging equipment, navigation tools, and services, and a sizeable global customer base, including each of the top 50 US Heart Surgery and Cardiology hospitals. One in every three interventional X-ray systems sold globally is a Philips system. With 2013 sales of approximately US$400m, Volcano is a leader in catheter-based imaging and measurements for minimally invasive diagnostics and treatment of coronary artery disease and peripheral vascular disease.
“The agreement to acquire Volcano significantly advances our strategy to become the leading systems integrator in image-guided therapies,” says Frans van Houten, chief executive officer of Royal Philips. “Volcano’s impressive and unique product portfolio is highly complementary to our strong offering in live image-guidance solutions, creating an opportunity to accelerate the revenue growth for our image-guided therapy business to a high single-digit rate by 2017. Our combined sales forces will be able to capture immediate cross selling opportunities, while our joint research and development teams will be able to develop new solutions to address significant unmet needs in the minimally invasive treatment of cardiovascular diseases.”
Van Houten adds: “Image-guided therapies provide significant benefits for healthcare systems and patients, including reduced patient trauma, shorter recovery times and hospital stays, and lower costs. As a result, our clinical partners and customers are asking for a tighter integration of imaging and measurement technologies to enable such therapies. This transaction allows us to provide our customers with an integrated solution to improve procedural outcomes at a decisive stage in the health continuum.”
“This transaction will be beneficial for our shareholders, customers, partners and employees. There is a large and growing global market opportunity for image-guided therapies, and as part of Philips, we gain the scale and resources needed to accelerate our goals of improving patient outcomes on a global basis, lowering cost and delivering innovative diagnostics and therapies in the coronary and peripheral markets. In addition, our shared expertise in the image-guided therapy market will allow us to further globalise our leading IVUS and FFR product offerings and enter new product areas,” comments Scott Huennekens, Volcano president and chief executive officer.
Upon completion of the transaction, the Volcano business and its 1,800 employees will be part of a dedicated, new image-guided therapy business group within Philips, which will be led by Philips executive Bert van Meurs, an experienced figure in the health care industry extensive knowledge of the image-guided therapy market.