Philips Electronics said today it was buying US-based medical images systems firm Stentor for about €235 million ($280 million) in cash, in its first hospital equipment acquisition in nearly four years.
Stentor supplies hospitals with picture archiving and communication systems (PACS) used for storing, managing and distributing digital radiology images.
Investors have been waiting for Philips to launch a new acquisition spree, as the electronics conglomerate has pledged to spend its billions of euros of cash to boost its medical systems unit which yields more reliable growth and profit than the volatile chip and consumer electronics activities.
The Stentor purchase makes a Philips bid for Belgium's image technology company Agfa Gevaert less likely, analysts said, referring to persistent takeover rumours. Philips is paying more than five times expected 2005 revenues of $50 million for Stentor.
Sales growth for 2006 is projected at 50 per cent based on the company's "pay-per-study" business model, in which customers pay a fee to view, distribute and store medical images rather than purchase a PACS system.
Stentor has a global market share of about 30 per cent, about double that of both Siemens from Germany and Belgium's Agfa Gevaert. The Belgian company warned earlier on Wednesday that second quarter profits were expected to be significantly below last year's levels, which was partly blamed on price erosion in healthcare systems.
Stentor adds less than 1 per cent to sales of Philips Medical Systems which amounted to €5.9 billion in 2004. Philips shares opened 0.4 per cent higher at €21.40, slightly underperforming the 0.5 per cent higher wider DJ Eurotech index.
Stentor's shareholders have approved the agreement and transaction, Philips said. Stentor will be incorporated into the Healthcare IT business of Philips' Medical Systems division.
From its headquarters location in Brisbane, California, Stentor will become the global headquarters of Philips' overall PACS business.