Thursday June 29, 2017 0 comments
COLORADO SPRINGS -- Netherlands-based Royal Philips (NYSE:PHG) (AEX:PHIA), a global leader in health technology, and The Spectranetics Corporation (NASDAQ:SPNC), a U.S.-based global leader in vascular intervention and lead management solutions, announced they 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 Spectranetics for USD 38.50 per share, to be paid in cash upon completion. This represents a 27 percent premium to Spectranetics' closing price on June 27.
The implied enterprise value is approximately EUR 1.9 billion, inclusive of Spectranetics’ cash and debt.
The board of directors of Spectranetics has approved the transaction and recommends the offer to its shareholders. The transaction is expected to close in the third quarter of 2017.
Philips has a leadership position in the EUR 6+ billion image-guided therapy market with a unique portfolio of interventional imaging systems and devices, planning and navigation software, and services, serving a large, global customer base and supported by a global network of leading clinical partners.
The acquisition of Spectranetics will further expand and strengthen Philips’ ImageGuided Therapy Business Group. Spectranetics is a leader in vascular intervention to treat coronary and peripheral artery disease, and in lead management for the minimally invasive removal of implanted pacemaker and implantable cardioverter defibrillator (ICD) leads. Spectranetics is currently growing in double digits and projects 2017 sales to be in the range of USD 293 million to USD 306 million.
Spectranetics' device portfolio includes a range of laser atherectomy catheters for treatment of blockages with laser energy in both coronary and peripheral arteries; the AngioSculpt scoring balloon used to mechanically push a blockage aside in both peripheral and coronary arteries; the AngioSculptX scoring balloon, which is the only drug-coated scoring balloon in the market, and the Stellarex drug-coated balloon, which treats common to complex lesions while inhibiting the recurrence of these blockages.
The Stellarex drug-coated balloon is a key growth driver in Spectranetics’ portfolio. Stellarex already is CE-marked and under review by the FDA for pre-market approval in the U.S.
The drug-coated balloon segment is one of the fastest growing segments in peripheral vascular procedures. Top-tier outcomes in the most complex patient population studied in drug-coated balloon IDE trials indicate that Spectranetics’ Stellarex has excellent clinical performance with proven results in complex disease.
“Today’s exciting announcement follows a series of bolton acquisitions to strengthen our portfolio across the health continuum,” said Frans van Houten, CEO of Royal Philips. “Building on the successful integration of the Volcano acquisition in early 2015, we are now accelerating our strategic expansion into therapy devices with the agreement to acquire Spectranetics.
"This transaction is expected to be revenue growth and profit accretive by 2018, given the projected revenue and productivity synergies. Spectranetics’ highly competitive product range, integrated with our portfolio of interventional imaging systems, devices, software and services will enable clinicians to decide, guide, treat and confirm the appropriate cardiac and peripheral vascular treatment to deliver enhanced care for patients with better outcomes, as well as significantly boost recurring revenue streams for Philips.”
“We are pleased to announce this agreement with Philips, which will deliver significant value to our shareholders,” said Scott Drake, Spectranetics president and CEO.
“Combining Philips’ innovations in image-guided therapy with Spectranetics’ portfolio and expertise in the therapeutic device space will create exciting opportunities and allow us to accelerate growth. As part of Philips, we will have the scale and resources to expand Spectranetics’ portfolio of highly differentiated products, our robust innovation pipeline, and our clinical data compendium.
“This transaction is a testament to the hard work and dedication of Spectranetics’ talented teammates. We have tremendous respect for Philips, as our two companies have a shared view on the importance of culture, values, and innovation, as well as a shared focus on improving patients’ lives around the world. We look forward to a smooth transition.”
Upon completion of the transaction, Spectranetics and its more than 900 employees will become part of the ImageGuided Therapy Business Group within Philips.
Spectranetics’ standalone revenue growth is expected to be double-digit and adjusted EBITA to be positive by 2018. Philips said it sees sustained high sales growth through new product introductions across a highly synergistic therapy device portfolio.
Moreover, the transaction will enhance the geographical expansion of Spectranetics’ products and commercialization opportunities in new, adjacent segments. As part of Philips, the Spectranetics business will benefit immediately from Philips’ platform enabling cost and working capital synergies. As a result, the combined Spectranetics and Philips Image Guided Therapy Devices business (Philips Volcano), within the ImageGuided Therapy Business Group, is expected to grow to approximately EUR 1 billion by 2020.
For the overall ImageGuided Therapy Business Group, Philips targets a high single-digit comparable sales growth and high teens adjusted EBITA margin for the medium term.
In 2016, this business group reported sales of approximately EUR 1.9 billion, of which approximately 20 percent was attributable to device sales. The transaction is expected to be accretive to Philips’ revenue growth, adjusted EBITA margins and adjusted EPS by 2018.
The transaction is structured as a cash tender offer by Philips for all of the issued and outstanding shares of Spectranetics, to be followed by a merger in which each share of Spectranetics not tendered in the tender offer will be converted into the USD 38.50 per share price paid in the tender offer.
Pursuant to the merger agreement, the transaction is subject to customary closing conditions, including certain regulatory clearances in the U.S. and in certain non-U.S. jurisdictions. The tender offer is not subject to any financing conditions.
Philips said it intends to finance the acquisition through a combination of cash on hand and the issuance of debt.
Headquartered in the Netherlands, the company is a leader in diagnostic imaging, image-guided therapy, patient monitoring and health informatics, as well as in consumer health and home care.
Philips' health technology portfolio generated 2016 sales of EUR 17.4 billion and employs approximately 70,000 employees with sales and services in more than 100 countries.
The Spectranetics Corporation develops, manufactures, markets and distributes medical devices used in minimally invasive procedures within the cardiovascular system. The company's products are available in over 65 countries and are used to treat arterial blockages in the heart and legs and in the removal of pacemaker and defibrillator leads.