Royal Philips, one of the world's largest manufacturers of imaging systems, said it plans to spend $1.2 billion to acquire Volcano, a San Diego-based provider of catheter-based imaging and measurement systems used in endovascular procedures.
The deal, announced Wednesday, is a strategic fit for Philips, according to analysts. It also fits into a broader consolidation trend underway among medical device manufacturers as they seek to offset pricing pressure and more stringent purchasing practices being used by U.S. hospitals. The acquisition is expected to close in the first three months of next year.
“Our clinical partners and customers are asking for a tighter integration of imaging and measurement technologies to enable such therapies,” Royal Philips CEO Frans van Houten (PDF) said in a statement. “This transaction allows us to provide our customers with an integrated solution to improve procedural outcomes at a decisive stage in the health continuum.”
Volcano reported $393.6 million in revenue in 2013, up 3% from $381.8 million in 2012. Shares of the company have dropped by nearly 50% over the past year because of lowered guidance and “waning investor sentiment,” BMO Capital Markets analyst Joanne Wuensch wrote in a Dec. 17 note to investors. About half of Volcano's sales come from the U.S. market.
Acquiring Volcano will lead to sales synergies and cross-selling opportunities, Philips said in a news release.
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