A Medical Device Daily

Respironics (Murrysville, Pennsylvania) on Friday reported that it will be acquired by Royal Philips Electronics (Amsterdam, the Netherlands), with Philips commencing a tender offer to acquire all of the outstanding shares of the company for $66 a share in cash, or about $5.1 billion.

That price represents a premium of about 31% over Respironics’ average closing share price for the 30 trading days ended Dec 20.

Respironics said that its board has unanimously approved the deal and recommends that Respironics shareholders accept and tender their shares into the offer. The tender offer is expected to commence by Jan. 8 and is subject to customary conditions, including U.S. and European regulatory approvals.

Respironics said that the transaction is expected to be completed in 1Q08.

Respironics develops systems to treat obstructive sleep apnea (OSA), characterized by the repeated cessation of breathing during sleep. The company estimates 18 million to 20 million sufferers of moderate or severe OSA in the U.S., but only 15% to 20% of these diagnosed. It also cites research demonstrating a link between OSA, heart disease, stroke and diabetes.

The company says it has a leading position in non-invasive ventilation and has recently introduced new home oxygen technologies to treat respiratory-impaired patients in the home. The remainder of the company’s business is focused on the hospital channel, including noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug delivery technologies.

Respironics will become the headquarters for Philips Home Healthcare Solutions group within Philips Healthcare, and Respironics’ senior operating leadership is expected to remain with the organization.

Philips has made a number of recent acquisitions in the home healthcare sector, including Lifeline Systems, Health Watch and Raytel Cardiac Services.

The company said that as Philips Home Healthcare Solutions will be supporting almost 1 million at-risk seniors, either in their own homes or in senior living facilities throughout the U.S. and Canada.

John Miclot, president/CEO of Respironics, said that the combination of companies “will allow us to continue to provide exceptional products and services to our customers and allow Respironics to expand its leadership in the global sleep and respiratory markets. Philips is the right partner to create additional growth opportunities for our company.”

“A core part of Philips’ healthcare strategy is to achieve a leading position in the high growth sector of home healthcare,” said Steve Rusckowski, CEO of Philips Healthcare and member of the board of management of Philips Electronics.

Philips said that Respironics will become the centerpiece of Home Healthcare Solutions, which will form part of Philips Healthcare as of Jan. 1.

Respironics markets its products in 141 countries and employs more than 5,300 associates worldwide.

In other dealmaking activity:

• SpineOvations (San Diego) reported that it has entered into an agreement to acquire core technology from Discogen (Weston, Florida), an emerging company specializing in the development of technologies to treat early disc degeneration.

“Combining SpineOvation’s resources and technology with Discogen’s core technology makes natural sense,” said M. Ross Simmonds, CEO of SpineOvations. “Discogen’s technology provides a method for intradiscal drug delivery which could dramatically enhance treatment for those suffering from early stage degenerative disc disease. We believe this to be a perfect complement to our DiscSeal technology and our overall strategic goal to develop solutions for chronic back pain as a result of internal disc derangement.”

Simmonds said that Discogen’s platform technology concept provides a method for alleviating symptoms of a degenerative disc disease by delivering drug compounds into the degenerated disc.

Peter Zahos, MD, founder and CEO of Discogen and chairman of the Department of Neurosurgery at the Cleveland ClinicFlorida (Naples), said, “The strategic vision of both organizations is in sync and ... with time we will be able to expand beyond what we are developing now and address a full spectrum of disc degeneration issues with varying approaches for each level of degeneration severity.”

SpineOvations develops biocompatible injectables for the stabilization of spinal discs and for other orthopedic applications, including non-surgical connective tissue repair. The company’s technology consists of a non-surgical application for identifying and treating spinal disc tears or fissures to seal and stabilize the structural integrity of the spinal disc.

SpineOvation’s treatment integrates the use of discography with the administration of the company’s DiscSeal, an injectable agent for soft tissue engineering, designed to fill and seal the disc defect and provide internal disc stabilization and the relief of pain which results from internal disc derangement. “This innovative approach offers the potential to provide a cost-effective treatment option for patients with chronic back pain that will delay or possibly prevent the need for more invasive treatments such as surgery for spinal fusion or disc replacement,” according to SpineOvation.

• OSI Systems (Hawthorne, California) reported that it has effected a Delaware short-form merger of Spacelabs Healthcare (Issaquah, Washington) and that Spacelabs is now a subsidiary of OSI.

OSI in mid-December unveiled plans to increase its ownership in Spacelabs to 90% and then, within 10 days, acquire the remaining shares for about $15 million (MDD, Dec. 14, 2007).

OSI said that within the next 10 days, notification of the merger and related information will be sent to Spacelabs’ pre-merger stockholders.

OSI manufactures electronic systems and components for critical applications, including healthcare, homeland security and aerospace.