Royal Philips on Wednesdaycompleted its $2.2 billion purchase of Colorado Springs-based medical device manufacturer Spectranetics Corp., the largest deal ever involving a local company.
Whether Philips retained some or all of Spectranetics' 900 worldwide employees, including nearly 500 at its headquarters in the InterQuest business park, remains unclear.
A Philips spokesman didn't respond Wednesday to an email question about how many Spectranetics employees werekept. When the deal was announced in June, Philips CEO Frans van Houten told stock analysts that he expected to reduce overhead costs linked with being a public company.
Spectranetics became part of Philips' Image-Guided Therapy Business Group, which generated $2.2 billion in revenue last year. Spectranetics was the largest of five local companies whose stock is traded on a major exchange, based on the total value of all of its stock.
"Spectranetics is a highly complementary addition to our Image-Guided Therapy business group and will strengthen its position in a ($7 billion) growth market," van Houten said in a news release. "The completion of this acquisition will accelerate the realization of our strategic expansion into therapy devices.
"The combination of Spectranetics' highly competitive product range and our leading portfolio of interventional imaging systems, devices, software and services will deliver enhanced care for patients by enabling clinicians to decide, guide, treat and confirm appropriate cardiac and peripheral vascular treatment."
Spectranetics manufacturers a medical laser, various catheters and a new drug-coated angioplasty balloon that was approved two weeks ago for use on U.S. patients. The devices are used to treat blockages in coronary and leg arteries and to remove pacemaker leads that have led to infections. The company had forecast sales this year of about $300 million.
Spectranetics co-founder Robert Golobic was an electrical engineering instructor at the University of Colorado at Colorado Springs and had spent years researching high-energy lasers in weapons at the Air Force Academy. When he started Spectranetics with a former student, it wasn't with medical devices in mind. He was trying to develop laser systems to transfer semiconductor circuit designs onto silicon more quickly and inexpensively.
Unable to put together a research team or land financing, Golobic went in a different direction. His neighbor, Norwegian-born engineer Johan Sverdrup, had conducted groundbreaking research on ultrasound and Doppler imaging to generate video images of organs. Together, they drew up a new business plan to focus on medical lasers and raised $320,000 from friends and associates. In 1986, the company bought its first laser from the University of Pennsylvania for $7,000 and repackaged it into its first system, which was designed to clear clogged arteries near the heart with a blast of ultraviolet light.
Royal Philips began its pursuit of Spectranetics on Jan. 10 at a JPMorgan health care investment conference and made four unsuccessful offers before the fifth was accepted, according to a filing last month by both companies with the Securities and Exchange Commission.
The deal will trigger "golden parachute" payments to four top Spectranetics executives totaling nearly $14 million, including $8.02 million to Spectranetics CEO Scott Drake, say estimates in the company's latest proxy statement. Eight current and one previous executive also own stock that lands them more than $1 million each, including $10.2 million to Drake.
Philips generated about $20 billion last year from its health technology businesses, which include diagnostic imaging, image-guided therapy, patient monitoring and consumer health and home care. It employs about 71,000 in more than 100 countries. The company, which was started by Frederik Philips in The Netherlands in 1891 to make light bulbs, has in recent years sold off consumer electronics and lighting units and acquired health technology businesses. The company overall last year earned $1.7 billion, with revenues totaling nearly $28 billion.
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