By a WSJ Staff Reporter
Royal Philips NV is buying U.S. medical-imaging company Volcano
Corp. for around $1 billion as the Dutch technology company moves
to further bolster its presence in the increasingly competitive
health-care equipment sector.
The total transaction value was $1.2 billion including debt,
Philips said.
Philips has sought in recent years to expand in the
image-therapy market, which it believes is worth roughly EUR4
billion ($4.99 billion) a year, as it struggling to gain momentum
in its health-care business.
Volcano is the market leader in making flexible tubes that can
produce ultrasound images of blood vessels as well as consoles to
measure blood flow. The San Diego, Calif.-based firm, which aims to
make products to help treat cardiovascular diseases in less
invasive ways, reported sales last year of about $400 million.
Volcano's products are "highly complementary" to Philips
existing offering, said Philips Chief Executive Frans van Houten.
The acquisition would allow the Dutch group to boost revenue growth
in its image-guided therapy business, Mr. van Houten said in a
statement.
Philips's CEO took over the running of group's medical-equipment
division last summer after the departure of the unit's top
executive Deborah DiSanzio following disappointing second-quarter
results.
Philips's health-care business, which competes with General
Electric Co. GE and Siemens AG in the hospital scanner market,
generated EUR9.58 billion in revenue last year, around 41% of total
sales.
In mature markets, which still make up the majority of global
health-care spending, hospitals and other care providers are
increasingly focused on boosting efficiency amid mounting pressure
to rein in medical spending. As a result, Philips has shifted its
focus to offering more consulting and software services, rather
than just delivering health-care systems such as CT and X-ray
scanners.
"The global health-care industry is undergoing a paradigm shift,
providing significant opportunities for Philips to deliver more
integrated solutions across the continuum of care, from prevention,
diagnosis and treatment, to monitoring and aftercare," Mr. van
Houten said back in July.
Under Mr. van Houten, Philips has been cutting costs and
focusing on fewer activities. The company announced in July it is
spinning off its lighting components business.
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