Respironics Inc - Written communication relating to an issuer or third party (SC TO-C)
December 21 2007 - 5:10PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
(RULE 14d-100)
Tender Offer Statement under Section 14(d)(1) or Section 13(e)(1) of the Securities
Exchange Act of 1934
RESPIRONICS, INC.
(Name of Subject Company (Issuer))
MOONLIGHT MERGER SUB, INC.
a wholly owned subsidiary of
PHILIPS HOLDING USA INC.
a wholly owned subsidiary of
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(Names of Filing Persons (Offerors))
Common Stock, par value $ 0.01 per share,
and associated common stock acquisition rights
(Title of Class of Securities)
761230101
(CUSIP Number of Class of Securities)
Joseph E. Innamorati
Moonlight Merger Sub, Inc.
1251 Avenue of the Americas
New York, NY 10020-1104
(212) 536-0641
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of filing persons)
with copies to:
Neil T. Anderson
Matthew G. Hurd
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
(212) 558-4000
CALCULATION OF FILING FEE
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Transaction Valuation
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Amount of Filing Fee
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Not Applicable*
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Not Applicable*
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A filing fee is not required in connection with this filing as it relates solely to preliminary communications made before
the commencement of a tender offer.
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Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with
which the offsetting fee was previously paid.
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Identify the previous filing by registration statement number or the Form or Schedule and the date of its
filing.
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Amount Previously Paid:
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N/A
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Form or Registration No.:
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Filing Party:
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N/A
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Date Filed:
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N/A
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Check the box if the filing relates solely to preliminary communications made before the commencement of a
tender offer.
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Check the appropriate boxes below to designate any transactions to which the statement relates:
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third-party tender offer subject to Rule 14d-1.
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issuer tender offer subject to Rule 13e-4.
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going-private transaction subject to Rule 13e-3.
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amendment to Schedule 13D under Rule 13d-2.
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Check the following box if the filing is a final amendment reporting the results of the tender offer:
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Additional Information
The tender
offer described in these written materials has not yet commenced, and
these written materials are neither an offer to purchase nor a solicitation of an offer to sell the common stock of
Respironics, Inc. (Respironics). Investors and security holders are urged to read
both the tender offer statement and the solicitation/recommendation statement regarding the tender
offer described in these written materials when they become available because they will contain
important information. The tender offer statement will be filed by Moonlight Merger Sub, Inc., a
fully-owned subsidiary of Philips Holding USA Inc., which is a fully-owned subsidiary of
Koninklijke Philips Electronics N.V. (collectively Philips), with the Securities and Exchange
commission (SEC) and the solicitation/recommendation statement will be filed by Respironics with
the SEC. Investors and security holders may obtain a free copy of these statements (when available)
and other documents filed by Philips or Respironics with the SEC at the website maintained by the
SEC at www.sec.gov. The tender offer statement and related materials, solicitation/recommendation
statement, and such other documents may be obtained for free by directing such requests to Investor
Relations of Respironics at 1010 Murry Ridge Lane, Murrysville, PA 15668.
THE
FOLLOWING WRITTEN MATERIALS WERE MADE AVAILABLE ON THE WEBSITE OF
KONINKLIJKE PHILIPS ELECTRONICS N.V. ON DECEMBER 21, 2007.
Amsterdam
December 21, 2007
Philips to acquire Respironics: A leading player in the
respiratory market
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Forward Looking Statements
Forward Looking Statements
This document and the related oral presentation, including responses to questions following the presentation 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. We caution readers that no forward-looking statement is a guarantee of future performance and that actual results could differ
materially from those contained in the forward-looking statements. Examples of forward-looking statements are statements we have made about our
strategy, estimates of sales growth, future EBITA and cost savings, future developments in our organic business as well as the benefit of future
acquisitions, and our capital position. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and
circumstances 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.
Forward looking statements that we make are subject to, among other things, domestic and global economic and business conditions,
levels of consumer and business spending in major economies, changes in consumer preferences with respect to our existing and new products,
our ability to develop and market new products, changes in legislation, the successful implementation of our strategy and our ability to realize the
benefits of this strategy, changes in exchange and interest rates, changes in tax rates, the performance of the financial markets, pension costs,
the levels of marketing and promotional expenditures by Philips and its competitors, raw materials and employee costs, our ability to identify and
complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain product lines and
businesses or restructure our operations, the rate of technological changes, political and other developments in countries where Philips operates and
industry consolidation as well as the impact of competition - a number of which factors are beyond our control. As a result, our actual future results
may differ materially from the plans, goals, and expectations set forth in such forward-looking statements.
Additional risks and factors are identified in our Annual Report for the fiscal year ended December 31, 2006 and our Annual Report on Form 20-F filed
with the U.S. Securities and Exchange Commission (the "SEC"), which is available on the SEC's website at www.sec.gov. Readers should consider
the disclosures in that Report and any additional disclosures that we have made or may make in documents that we have filed or furnished to the
SEC or may file with or furnish to the SEC or other regulatory authorities.
Any forward-looking statements made by or on our behalf speak only as of the date they are made. We do not undertake to update forward-looking
statements to reflect any changes in expectations with regard thereto or any changes in events, conditions or circumstances on which any such
statement is based. Statements regarding market share, including as to Philips' competitive position, contained in this document are based on outside
sources such as specialized research institutes, industry and dealer panels in combination with management estimates. Where information is not yet
available to Philips, those statements may also be based on estimates and projections prepared by outside sources or management. Rankings are
based on sales unless otherwise stated.
Use of non-GAAP Information
In presenting and discussing the Philips Group's financial position, operating results and cash flows, management uses certain non-US GAAP
financial measures. These non-US GAAP financial measures should not be viewed in isolation as alternatives to the equivalent US GAAP measure(s)
and should be used in conjunction with the most directly comparable US GAAP measure(s).
Use of fair value measurements
In presenting the Philips Group's financial position, fair values are used for the measurement of various items in accordance with the applicable
accounting standards. These fair values are based on market prices, where available, and are obtained from sources that are deemed to be reliable.
Readers are cautioned that these values are subject to changes over time and are only valid at the balance sheet date. When a readily determinable
market value does not exist, fair values are estimated using valuation models which we believe are appropriate for their purpose. They require
management to make significant assumptions with respect to future developments which are inherently uncertain and may therefore deviate from
actual developments. In certain cases, independent valuations are obtained to support management's determination of fair values.
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Contents
I Strategic rationale
II Transaction highlights
III Respironics overview
IV Value creation potential
V Timetable
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Journey towards Consumer Health & Wellness
The acquisition of Respironics is a significant milestone on a journey we began in September
2004 when we announced our ambition to build a &128; 750m - &128; 1 billion business in Consumer
Healthcare and Wellness within 3 to 4 years. By the end of 2007 we will have achieved
&128; 700m of this target and this acquisition will take us to almost &128; 1.5 billion for 2008.
We believe that Home Healthcare will be a huge market in the future and the investments that
we are making will clearly separate us from our competitors and develop a clear link with our
Lifestyle businesses.
Respironics significantly broadens Philips' home healthcare platform. Philips' global
distribution reach is likely to accelerate Respironics' sales volume, while enabling cost
savings for both sleep and hospital businesses. The ventilation business of Respironics
complements Philips' patient monitoring business for acute and critical care.
BU Consumer Health &
Wellness was established
as part of DAP
Avent and Sonicare were combined as
Health & Wellness in DAP
Lifeline was separated from DAP as
Consumer Healthcare Solutions
Vision 2010: Consumer Healthcare Solutions
renamed to Home Healthcare Solutions and,
together with PMS, comprise our Healthcare
sector; Health & Wellness to be part of
Consumer Lifestyle sector
Lifeline
acquisition
Avent
acquisition
Health Watch
acquisition
9.2004
7.2006
DAP Sonicare
acquisition
2000
Raytel
acquisition
1.2008
Respironics
announcement
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Respironics has strategic links to multiple Philips
business areas
5%
Respironics-Philips strategic links
Links to Philips Healthcare's cardiac care
cycle strategy through sleep apnea
comorbidities with cardiac conditions
Healthcare
(hospital)
Home Healthcare
Solutions
Consumer Lifestyle
Lighting &
Philips Research
End-user overlap between Respironics
oxygen therapy patients and Lifeline
subscribers
Comorbidity link between Raytel Cardiac
Services patients and obstructive sleep
apnea patients
Respironics' (future) consumer products
around sleep add to existing Lifestyle
portfolio in mass retail channels
Snoring
Insomnia
Respironics' light-based solutions for sleep
disorders e.g. jet lag prevention products,
treatment devices for Seasonal Affective
Disorder and other Circadian Rhythm
disorders
Philips business
area
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Through Respironics we differentiate ourselves from our
key competitors
Respironics is an acquisition that positively differentiates us from our key competitors :
Market segment: positions Philips as a true global leader in the fast growing Home
Healthcare space with a strong product portfolio, extensive channel access and an
improved R&D base to leverage future offerings and solutions
Device segment: provides Philips with a leadership position in the fast-growing and
profitable Respiratory market at a time when the North American Imaging Systems
market is contracting
Care cycle focus: offers Philips another possibility to move into the early and end
stages of the care cycle of a disease that takes place in the home. The capabilities of
Respironics (treatment and treatment compliance) complement Lifeline (monitoring)
and Raytel (monitoring and 'self diagnosis')
Disease focus: gives Philips a global leadership position in the fast-growing market of
obstructive sleep apnea (OSA) therapy, a condition with high co-morbidities with
many chronic conditions such as Congestive Heart Failure (CHF), hypertension and
diabetes
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2007.00000000023
500.000000000057
1000.00000000011
1500.00000000017
2000.00000000023
2007
2012
Respironics provides the platform for accelerating
our Home Healthcare strategic vision
Size (Eur M)
Accelerated
roadmap with
Respironics
Integration
&128;5B+ Global home
healthcare leader
Asthma detection?
Consumer Lifestyle for the elderly?
Broad scale insomnia solutions?
Hypertension/diabetes solutions?
Current HHS
Lifeline
Health Watch
Raytel
Motiva
Niche leadership
in connected
home care
Consolidated
&128;2B+ leadership in
Cardiac & Respiratory
treatment compliance
and monitoring in the
Home.
Wave 1
Wave 2
Existing strategic roadmap
Philips - Respironics
Channels
Technologies/applications
Brand
Follow-on acquisitions
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Pre hospital
Hospital
Home care
Emergency
care
Operating Room
(OR) / Anesthesia
Intensive Care
Unit (ICU)
Perinatal care
Home care
Radiology
Examples of components of the healthcare system:
Monitoring
IT Systems
Monitoring
IT Systems
Monitoring
Ventilation
Ventilation
Ventilation
Neonatal ICU
equipment
Monitoring
Defibrillators
OR equipment
Lighting
Tables
Medical equip.
Philips
integrated via clinical decision support
Anesthesia
ICU equipment
Infusion
Incubators/
Warmers
Monitoring
(personal
emergency &
remote patient
monitoring
Oxygen therapy
Sleep therapy
Ventilation
X-Ray
CT
MR
Areas
...and improves Philips' care cycle presence
Respironics
The continuum of care
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Respironics contributes to execution of the Philips
Healthcare Sector's Vision 2010 strategy...
5%
Respironics provides a logical bridge
between the professional and home
healthcare settings, filling many existing
gaps in the care cycle
Vision & Mission
Vision
Removing boundaries in healthcare
Mission
Improve lives through solutions designed
around needs of customers and patients
Philips' differentiation
Patient and care provider driven
Respironics' fit
Respironics adds close to &128;1B immediate
additional business, with leading growth
and profitability
Respironics would be a key differentiator
for growing home care and also provides
further levers to growth in Emerging
Markets
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Vision 2010
We are taking the next evolutionary step in our journey
towards becoming a market-driven global leader in
Healthcare, Lifestyle and Technology
Formation of market sectors
to realign our organization
and go to market approach
with the healthcare and
lifestyle technology
company strategy.
Integration of our
businesses within these
sectors will leverage our
best capabilities to deliver
on customer focus, growth
and profitability targets.
Innovation
Brand
Body
Mind
Space
Appearance
Body
Mind
Space
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Contents
I Strategic rationale
II Transaction highlights
III Respironics overview
IV Value creation potential
V Timetable
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Financial highlights
All cash offer of US$66.00 per share represents a total enterprise value of
US$4.9bn/&128;3.4bn(a)
Implied CY 2007 EBITA transaction multiple of 24.7x (b) and 22.5x (b) based on FY
2008 estimates.
Respironics will increase revenue growth and be EBITA margin accretive to Philips
and Philips Medical Systems immediately
(a) Based on $ to &128; exchange rate of 1.44
(b) Based on IBES estimates. Excludes one time charges. Includes stock based compensation expense
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Contents
I Strategic rationale
II Transaction highlights
III Respironics overview
IV Value creation potential
V Timetable
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Respironics introduction
Founded in 1976 and headquartered in Murrysville, US
A leading developer, manufacturer, and distributor of
products for the global respiratory market
#1 in the global OSA market with products distributed in
over 131 countries
History of innovation with a portfolio of emerging growth
technologies
Approximately 5,000 employees
Sales Distribution
(Fiscal year 2007)
(a): EBITA includes stock based compensation expense and excludes restructuring and acquisition related expenses,
adjusted for stock based compensation EBITA is US$194m/16% margin. MAT is Moving Annual Total.
US Home Respiratory & Sleep Int'l Home Respiratory & Sleep US hospital Int'l hospital
51 22 18 9
US EMEA Asia Pacific Latin America
69 16 11 4
Key financials
MAT Sept 2007 Revenue: US$1.2bn
MAT Sept 2007 EBITA margin (a): US$180m/15%
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Respiratory devices
Within home healthcare, respiratory is the most attractive
segment
Global home healthcare market US$B, 2007E
Note: Services market is service-provider revenues; equipment and supplies markets are manufacturer revenues; overview excl. blood
glucose meters
High market growth rates and
profitability, especially in
Sleep Apnea
Market still largely under-
penetrated, especially outside of
the US
Closest adjacency to current core
(Acute Care)
Market, 2007E
Labour intensive services
Mobility and living aids
Technology based services
Infusion pumps
Supplies
5.6
127.0
4.3
1.5
0.9
2.3
Size (B)
Growth
10%
5%
5%
12%
9%
5%
Market segment
%
In the US$ 140bn home healthcare market
respiratory equipment is an attractive
segment for Philips
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Respironics provides Philips with leading positions in
obstructive sleep apnea (OSA) therapy and other attractive
segments
Global respiratory market overview, 2007E
Respironics' market
position, #
1
2
3
3
5
OSA diagnostics does not include Home Diagnostics devices
Source: Global Industry Analysts; Frost & Sullivan; Company estimates
1
1.78
OSA therapy devices
1.13
Oxygen equipment
0.90
Ventilators
0.49
Nebulizers
0.30
Spirometers
0.22
Manual resuscitators
0.21
Masks, Circuits & Disposables
0.19
OSA diagnostic devices
0.15
Humidifiers
0.14
Pulmonary function testing
0.11
Peak flowmeters
5.62
Total
17%
8%
4%
5%
7%
6%
7%
8%
4%
3%
9%
10%
Market size, US$ B
CAGR 2007-2010
0.10
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Diverse product portfolio addresses both home and hospital
markets
Sleep therapy devices
Home oxygen therapy
Sleep Well Ventures
Sleep Diagnostics
Patient Interfaces
Non
-
invasive Ventilation
Invasive Ventilation
Patient Monitoring
Respiratory Drug Delivery
Children's Medical Ventures
Home
Hospital
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Strong financial record with leading growth and
margins
MAT Sept 2002
2007
CAGR
Double digit sales growth(a)
Strong EBITA margin of
15%
Sales (US$m) 526 1,240 19%
EBITA (US$m) 80 180 18%
Note: EBITA includes stock compensation expense and excludes restructuring and acquisition related expenses
EBITA excluding stock compensation EBITA for 2007 is US$194m/CAGR 18%/EBITA margin 16%. MAT is Moving Annual Total
(a) Includes sales growth from acquisitions
Source: Company filings
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Respironics: Key strengths
#1 position in Global OSA market
Market leader in fast-growing non-invasive ventilation
Highly attractive market with low penetration and double digit growth
Strong R&D capabilities in a market driven by product innovation
Strong in home offering with leading position
Strong and experienced management team
Robust financial track record - earnings expectations met in the last 32 quarters
with a EPS CAGR of 24% in the last 5 years
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Contents
I Strategic rationale
II Transaction highlights
III Respironics overview
IV Value creation potential
V Timetable
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Combined financials
Medical Philips & PMS &
MAT-Sept 2007 Philips(a) Systems(a) Respironics(b) Respironics Respironics
Combined post-synergies(c)
Note: Philips financials do not include Genlyte numbers. EBITA includes stock compensation expense.
Financials for Philips and Medical Systems are excluding MedQuist
Respironics' financials converted from $ to &128; at the average exchange rate of 1.42
Based on run-rate revenue and cost synergies.
Source: Company filings
Sales (&128;m) 26,486 6,517 873 27,485 7,516
EBITA (&128;m) 1,938 870 127 2,136 1,068
Margin % 7.3% 13.3% 14.6% 7.8% 14.2%
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Significant value creation
Respironics significantly broadens Philips' home healthcare platform
Enables Philips to execute home healthcare vision through greater depth to touchpoints of the
consumer in healthcare management capacity
Expands footprint into consumer health and remote monitoring established by Lifeline and Raytel
acquisitions
Opportunity for cross selling between the channels (notably Respironics and Lifeline)
Philips global distribution reach likely to accelerate Respironics' sales volume
while enabling cost savings for both sleep and hospital businesses
Ventilation business of Respironics complements Philips' patient monitoring
business for acute and critical care. Philips' access and scale into the hospital
channel will create opportunity to grow Respironics' hospital sales and cut
expenses
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Respironics continues Philips' strategy of value accretive
acquisitions ~ &128;10 bn over past 2 years invested
(a) - Date shown refers to announcement date
(b) - IGC: Intermagnetics, PLI: Partners in Lighting, DLO: Digital Lifestyle Outfitters, TIR: TIR Systems, VMI: VMI-sistemas medicos (Brazil)
Stentor Liumileds Lifeline Witt Bodine Power Sentry Avent IGC PLI Health watch DLO TIR VMI Color Kinetics Raytel Genlyte Emergin VISICU Moonlight
Blank 0.2 1 1.6 1.7 1.7 1.7 2.4 3.4 4 4.1 4.2 4.2 4.2 4.7 4.8 6.6 6.6 6.7
Healthcare 0.2 0.6 0.1 1 0.1 0.1 0.1 0.1 0.2 3.4
Lighting 0.8 0.1 0.1 0.5 1.8
Consumer Lifestyle 0.1 0.7 0.6 0.1
Stentor
Lumileds
Lifeline
Witt
Bodine
Power
Sentry
Avent
IGC(b)
PLI(b)
Health
watch
DLO(b)
TIR(b)
VMI(b)
Color
Kinetics
Genlyte
Amounts in &128; billions (Enterprise Value)
Aug
2005
Nov
2005
Mar
2006
Apr
2006
Jul
2006
Jul
2006
Sep
2006
Nov
2006
Feb
2007
Apr
2007
May
2007
Jun
2007
Jun
2007
Aug
2007
Nov
2007
Date completed
Raytel
Nov(a)
2007
Respironics
Dec(a)
2007
VISICU
Emergin
Dec(a)
2007
Dec(a)
2007
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Capital reallocation
2005-2007, including recently announced share repurchase program of EUR 5 billion
100% = EUR 22,5 b
Acquisitions
* Including announced acquisitions and share repurchase program of EUR 5.0 billion for 2008/2009
Pension funding
Cash to
shareholders
*
Dividend
Share repurchase
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Expected 2008 growth and profitability of
major 2006-2007 acquisitions
Lifeline Systems
Witt Biomedical
Avent
Intermagnetics
Partners in Lighting
Color Kinetics
Sales to thirds
Organic growth
EBITA
% of sales
12%-13%
18%-19%
Major acquisitions
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Contents
I Strategic rationale
II Transaction highlights
III Respironics overview
IV Value creation potential
V Timetable
|
Respironics timeline
Expected Date Milestone
21-Dec Announcement
Filing of tender offer
Q1-2008 Closure of tender offer
Within 5 business days following
execution of the agreement
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