Philips to buy Spectranetics for $1.7 bn

Royal Philips NV’s $1.7-billion deal to buy Spectranetics Corp, a US maker of devices to treat cardiac disease, shows the Dutch company is moving more aggressively to bolster its growing health care business.

Philips will offer $38.50 a share in cash for the Colorado Springs-based company, according to a statement Wednesday. The price is 27 per cent above Spectranetics’ closing level on Tuesday. Philips also will buy back as much as ^1.5 billion ($1.7 billion) of its own stock to offset share dilution from an employee incentive program.

Philips Chief Executive Officer Frans van Houten has been on the hunt for acquisitions to fuel expansion in health care, already the company’s largest business. After spinning off a lighting division last year and selling another called Lumileds, the executive has made the market for medical equipment and services the company’s focus. Spectranetics was on Philips’s radar “for quite a while,” he said on a call Wednesday, adding that, to his knowledge, Philips was the only suitor.

“With the ongoing sell down of light and the soon-to-besold majority in Lumileds, Philips is able to make the next move in its health care strategy,” Marcel Achterberg, an analyst at Degroof Petercam, said in a note. “Acquisitions should boost the growth rate.”

Philips dropped 1.1 per cent to ^32.18 at 12:27 pm in Amsterdam, where the company is based. The stock has returned about 16 per cent this year including dividends, compared with a 9.8 per cent return for the AEX Index.

Spectranetics is growing at a double-digit percentage rate and forecasts sales this year of $293 million to $306 million, according to Philips. The US company’s so-called imageguided therapy devices to clear blocked arteries provide an alternative to stents, which are metal tubes widely used in cardiac procedures, van Houten said. BLOOMBERG

Philips will offer $38.50 a share in cash for Spectranetics, which is 27 per cent above the latter’s closing level on Tuesday