Spectranetics is the US based heart disease device maker company which is ready to be taken over by the Dutch healthcare company Phillips with an agreement of $2.16 billion which would also include their debts. Spectranetics is very popular for making devices that use techniques like laser and tiny drug-covered balloons used by majority hospitals for the cleansing of the arteries and veins that might be blocked due to cholesterol or any kind of heart disease. According to the agreement between Spectranetics and Phillip, the shareholder would be paid 27 percent more than their share prices when they closed on Thursday at $38.50 per share.
Phillips is one of the biggest conglomerate companies of the Dutch and has businesses expanded in various sectors. But over past five years, the CEO of the company, Frans van Houten has diverted his focus towards the healthcare sector and precisely towards and precisely focusing on the maker of healthcare equipment for which they have sold off their lighting division and preparing to sell their other consumer durable product businesses. Healthcare equipment making sector is a booming sector and Phillips wanted to ensure they are leading in this sector. This takeover would be an addition to their image- guided therapy business. Phillips has been very aggressive in this business since they have already taken over Volcano, a vascular imaging company in 2015.
The company is projecting that Spectranetics would be able to generate great revenues for them during 2018 since Spectranetics speculated that their total revenue prior to the takeover, for the year of 2018 would be around $300 million. After these two takeovers, Phillips has made its position strong in the healthcare and heart disease therapy business sector. According to the analyst from Berenburg, said that the decision for takeover by Phillip was correct but it would take at least five years for the company to start making revenues against the investment they have made right now for the takeover. This could clearly be seen after the dip suffered by Phillips in their share prices by 1.35 percent and closing at 32.1 Euros.
According to their comments, the investment would help the company to improve their position in the image- guided therapy business and cardiovascular treatment equipment making section but the price is so huge that they might expect to get slow returns and this would ultimately affect the overall earnings of the company. CEO van Houten has already made it clear that the decision of the takeover wasn’t under any pressure from their new investor, U.S. hedge fund Third Point and it was just a strategic decision.
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