Developer of minimally invasive medical devices Spectranetics (SPNC 38.40, +8.00) trades about 26.3% higher this afternoon following a deal which it would be bought by Holland-based Philips (PHG 36.30, -0.33 -0.90%) for $38.50 per share. The implied enterprise value of the deal, therefore, is about EUR 1.9 billion, inclusive of SPNC’s cash and debt.
The deal is aimed at enhancing PHG’s position in the image-guided therapy market. As a result, the combined SPNC and Philips Image Guided Therapy Devices business (Philips Volcano), within the Image-Guided Therapy Business Group, is expected to grow to about EUR 1 billion by 2020. For the overall Image-Guided Therapy Business Group, PHG 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 about EUR 1.9 billion of which about 20% was attributable to device sales.
The acquisition of SPNC will further expand and strengthen Philips’ Image-Guided Therapy Business Group. SPNC 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. SPNC is currently growing double digits and projects 2017 sales to be in the range of $293- 306 million.
Looking forward, PHG sees the deal being accretive to its revenue growth, adjusted EBITA margins and adjusted EPS by 2018. The deal is expected to close in Q3.
In Amsterdam today, shares of Koninklijke Philips NV currently sit near lows, down about 1.9% with under an hour remaining on the session.