Business, diagnostic imaging  

Philips to acquire MRI component and accessory manufacturer Intermagnetics

22 June 2006

Amsterdam, The Netherlands. Royal Philips Electronics (NYSE:PHG) has strengthened its position in the magnetic resonance imaging (MRI) market with the acquisition of Intermagnetics General Corporation (NASDAQ:IMGC), one of the leading manufacturers of MRI magnets and other devices. Philips will also move its MRI headquarters to the company's base in New York.

Philips will acquire Intermagnetics for US$27.50 per share or a total equity value of approximately US$1.3 billion (1 billion) to be paid in cash upon completion. The Board of Directors of Intermagnetics has unanimously approved the proposed transaction. Completion of the transaction is subject to regulatory approval, to the terms and conditions of the merger agreement and to the approval of Intermagnetics' shareholders.

Intermagnetics develops, manufactures and markets high-field superconducting magnets used in Magnetic Resonance Imaging (MRI) systems and is viewed as the technological innovator in this market. Intermagnetics also provides specialized MRI compatible patient monitoring devices and radio frequency (RF) coils that are predominantly supplied to hospitals.

The acquisition of Intermagnetics will strengthen Philips' position in the key market of magnetic resonance imaging. It will allow Philips to significantly rationalize its supply chain, to enhance its competitive position and to participate in the fast growing market for RF coils. Philips anticipates the transaction to be accretive to its operating margin towards the end of 2007. There will be a one-time charge of approximately 85 million related to in-process R&D expenses, integration of supply chain and various purchase accounting items, taken in the latter half of 2006. For the last four quarters ended February 26, 2006, Intermagnetics' revenues were US$ 304 million.

"Through this acquisition, we will greatly strengthen the overall performance and innovation capability of our MRI business," said Jouko Karvinen, member of the Philips Board of Management and CEO of Medical Systems. "In the short term, we expect to gain equipment market share and to grow the installed base by expanding our product offerings with an accelerated innovation rate and a lower cost supply chain. Intermagnetics' leading positions in the high-growth and high-value markets of RF coils and MRI patient monitoring will enable us to build unique solutions for our customers," he added. "In the longer term, we believe that MRI technology will become important in molecular imaging, therefore, positioning us well for the future."

Philips also recognizes the benefits offered by the breakthrough technology of SuperPower, Intermagnetics' Energy Technology subsidiary, and will actively consider the most effective way to achieve its potential.

Glenn H. Epstein, chairman and chief executive officer of Intermagnetics General Corporation said: "Our Board of Directors unanimously feels that this is the logical next-stage for Intermagnetics. We will now be better positioned to align our core strengths in the design and manufacture of superconducting magnets, RF coils and MRI compatible patient monitors with Philips' deep expertise in MRI system design and clinical applications. This is truly a unique opportunity where another clear winner is the MRI business in general."

Intermagnetics employs approximately 1,150 people. Its headquarters in Latham, New York will become the global headquarters of Philips' enlarged magnetic resonance business. Upon completion of the acquisition, Glenn H. Epstein will join Philips to lead the MRI business and the integration process. He will report to Steve Rusckowski, CEO of Philips Medical Imaging Systems.

Magnetic Resonance Imaging is one of the key imaging technologies in radiology departments in hospitals. In 2005, the total MRI market was approximately 5 billion, and consisted of MRI systems, services and accessories (such as RF coils). Over the past 10 years, the number of MRI procedures grew on average by 10% per year. This has been driven by an increasing number of diagnostic applications. Magnetic resonance imaging is radiation free, and is the preferred technique for high-resolution imaging of the brain, spine, abdomen, breast, prostate, blood vessels, and of all joints in the body.

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