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, today announced that 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, 2017. 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’ Image-Guided 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 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
[4], 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.
All of these market segments exhibit high growth rates.
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 premarket 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 bolt-on
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, President and CEO of Spectranetics. “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.”
FinancialsUpon completion of the transaction,
Spectranetics and its more than 900 employees will become part of
the Image-Guided Therapy Business Group within Philips.
Spectranetics’ standalone revenue growth is expected to be
double-digit and adjusted EBITA to be positive by 2018. Philips
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 Image-Guided
Therapy Business Group, is expected to grow to approximately EUR 1
billion by 2020. For the overall Image-Guided Therapy Business
Group, Philips targets a high single-digit comparable sales growth
and high-teens adjusted EBITA margin for the medium-term [5]. 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 intends to finance the
acquisition through a combination of cash on hand and the issuance
of debt.
[1] Stellarex is not available for sale
in the U.S.[2] Adjusted EBITA is defined as
Income from operations (EBIT) excluding amortization of intangible
assets (excluding software and development expenses), impairment of
goodwill and other intangible assets, restructuring charges,
acquisition-related costs and other significant
items[3] Adjusted EPS is EPS excluding
restructuring, acquisition-related and intangible amortization
charges[4] AngioSculptX is not available
for sale in the U.S.[5] Medium-term: 3-4
years as of the end of 2016
About Royal PhilipsRoyal Philips (NYSE: PHG,
AEX: PHIA) is a leading health technology company focused on
improving people's health and enabling better outcomes across the
health continuum from healthy living and prevention, to diagnosis,
treatment and home care. Philips leverages advanced technology and
deep clinical and consumer insights to deliver integrated
solutions. 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. News
about Philips can be found at www.philips.com/newscenter.
About SpectraneticsThe 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.
The Company's Vascular Intervention (VI) products include a
range of laser catheters for ablation of blockages in arteries
above and below the knee, the AngioSculpt scoring balloon used in
both peripheral and coronary procedures, and the Stellarex
drug-coated balloon peripheral angioplasty platform, which received
European CE mark approval in December 2014. The Company also
markets support catheters to facilitate crossing of peripheral and
coronary arterial blockages, and retrograde access and guidewire
retrieval devices used in the treatment of peripheral arterial
blockages, including chronic total occlusions. The Company markets
aspiration and cardiac laser catheters to treat blockages in the
heart.
The Lead Management (LM) product line includes excimer laser
sheaths, dilator sheaths, mechanical sheaths and accessories for
the removal of pacemaker and defibrillator cardiac leads, including
the Bridge™ Occlusion Balloon.
For more information, visit www.spectranetics.com.
Additional InformationThe tender offer
described in this communication (the “Offer”) has not yet
commenced, and this communication is neither an offer to purchase
nor a solicitation of an offer to sell any shares of the common
stock of Spectranetics or any other securities. On the commencement
date of the Offer, a tender offer statement on Schedule TO,
including an offer to purchase, a letter of transmittal and related
documents, will be filed with the United States Securities and
Exchange Commission (the “SEC”) by Philips and a
Solicitation/Recommendation Statement on Schedule 14D-9 will be
filed with the SEC by Spectranetics. The offer to purchase shares
of Spectranetics common stock will only be made pursuant to the
offer to purchase, the letter of transmittal and related documents
filed as a part of the Schedule TO. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ BOTH THE TENDER OFFER STATEMENT AND THE
SOLICITATION/ RECOMMENDATION STATEMENT REGARDING THE OFFER, AS THEY
MAY BE AMENDED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The
tender offer statement will be filed with the SEC by HealthTech
Merger Sub, Inc., a wholly owned subsidiary of Philips Holding USA
Inc., which is a wholly owned subsidiary of Royal Philips, and the
solicitation/recommendation statement will be filed with the SEC by
Spectranetics. Investors and security holders may obtain a free
copy of these statements (when available) and other documents filed
with the SEC at the website maintained by the SEC at www.sec.gov or
by directing such requests to the Information Agent for the Offer,
which will be named in the tender offer statement.
Forward-Looking Statements This release may
contain certain forward-looking statements with respect to the
financial condition, results of operations and business of Philips
and certain of the plans and objectives of Philips with respect to
these items, including without limitation completion of the Offer
and merger and any expected benefits of the merger, and certain
forward-looking statements regarding Spectranetics, including
without limitation with respect to its business, the Offer and
merger, the expected timetable for completing the transaction, and
the strategic and other potential benefits of the transaction.
Completion of the Offer and merger are subject to conditions,
including satisfaction of a minimum tender condition and the need
for regulatory approvals, and there can be no assurance that those
conditions can be satisfied or that the transactions described in
this release (the “Transactions”) will be completed or will be
completed when expected. Often, but not always, forward-looking
statements can be identified by the use of words such as “plans,”
“expects,” “expected,” “scheduled,” “estimates,” “intends,”
“anticipates,” “projects,” “potential,” “continues” or “believes,”
or variations of such words and phrases, or by statements that
certain actions, events, conditions, circumstances or results
“may,” “could,” “should,” “would,” “might” or “will” be taken,
occur or be achieved. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future and there are
many factors that could cause actual results and developments to
differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not
limited to, (i) the risk that not all conditions of the Offer or
the merger will be satisfied or waived; (ii) uncertainties relating
to the anticipated timing of filings and approvals relating to the
Transactions; (iii) uncertainties as to the timing of the Offer and
merger; (iv) uncertainties as to how many of Spectranetics’
stockholders will tender their stock in the Offer; (v) the
possibility that competing offers will be made; (vi) the failure to
complete the Offer or the merger in the timeframe expected by the
parties or at all; (vii) the outcome of legal proceedings that may
be instituted against Spectranetics and/or others relating to the
Transactions; (viii) the risk that the Transactions disrupt current
plans and operations of Spectranetics and affect its ability to
maintain relationships with employees, customers, or suppliers;
(ix) the possibility that the parties may be unable to achieve
expected synergies and operating efficiencies within the expected
time-frames or at all and to successfully integrate Spectranetics’
operations into those of Philips; (x) the successful implementation
of Philips’ strategy and the ability to realize the benefits of
this strategy; (xi) domestic and global economic and business
conditions; (xii) regulatory developments affecting Philips’ and or
Spectranetics’ actual or proposed products or technologies; (xiii)
political, economic and other developments in countries where
Philips operates; (xiv) unpredictability and severity of
catastrophic events; (xv) industry consolidation and competition;
and (xvi) other risk factors described in Spectranetics’ Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q filed with
the SEC. Any forward-looking statements in this release are based
upon information known to Philips on the date of this announcement.
Neither Philips nor Spectranetics undertakes any obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise.
This press release contains inside information within the
meaning of Article 7(1) of the EU Market Abuse Regulation.
For further information, please contact:
Philips:
Steve Klink
Philips Group Press Office
Tel.: +31 6 10888824
E-mail: steve.klink@philips.com
Ksenija Gonciarenko
Philips Investor Relations
Tel.: +31 20 5977055
E-mail: ksenija.gonciarenko@philips.com
Spectranetics:
Michaella Gallina
Spectranetics Investor Relations
Tel.: +1 719 447 2417
E-mail: Investor.relations@spnc.com
Zach Stassen
Spectranetics Investor Relations
Tel.: +1 719 447 2292
E-mail: Investor.relations@spnc.com
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