The Dutch electronics giant, Philips announced that it has agreed to acquire Volcano Corporation, the American medical device maker for $1.2 billion including the assumption of debt.
The acquisition of Volcano Corporation which is a maker of catheter-based measurement and imaging devices, used for diagnosing cardiovascular problems, would boost Philips’s lineup of medical imaging devices as well as expand opportunities to sell its existing products to Volcano customers.
Amsterdam -based, Philips has agreed to pay about $1 billion in cash or $18 per share for all outstanding shares of Volcano. This offer represents a 57 percent premium to Volcano’s closing price on Tuesday of $11.49.
Chief executive officer of Philips, Frans van Houten said that the agreement to acquire Volcano significantly advances their strategy to become the leading systems integrator in image-guided therapies. Volcano’s impressive and unique product portfolio is highly complementary to their strong offering in live image-guidance solutions, creating an opportunity to accelerate the revenue growth for their image-guided therapy business to a high single-digit rate by 2017.
The board of directors of Volcano has collectively approved the offer and has recommended shareholders to accept it.
The transaction which is a subject to regulatory approval is expected to close in the first quarter of 2015. Philips said that it intended to finance the transaction via cash on hand and new debt.
Within Philips, Volcano would be integrated into a new image-guided therapy group after the transaction which would be led by Philips executive, Bert van Meurs.
San Diego- based, Volcano, posted sales of $400 million in 2013, and has around 1,800 employees.
Bank of America Merrill Lynch and Lazard advised Philips, while Goldman Sachs advised Volcano.
Frans Van Houten, said that in an aging world with more chronic disease, health and healthcare are enormous opportunities that they want to focus on.
Volcano Corporation makes catheters which can slide into veins to make ultrasound scans of the interiors of blood vessels. Philips is a leading maker of the X-ray machines that 'map' patients' bodies as surgeons insert the catheters.
Van Houten said that Volcano would also give Philips a closer relationship to customers.