Philips to Acquire MRI Components Manufacturer

Philips Medical Systems (Best, The Netherlands) has signed a definitive agreement with Intermagnetics General Corp. (Latham, NY, USA), under which Philips will acquire Intermagnetics for US$27.50 per share or a total equity value of approximately $1.3 billion (EUR 1 billion) to be paid in cash upon completion. 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 MRI systems and is viewed as the technologic innovator in this market. Intermagnetics also provides specialized MRI-compatible patient monitoring devices and radiofrequency (RF) coils that are mostly supplied to hospitals.

The acquisition of Intermagnetics will strengthen Philips' position in the key market of MRI. It will allow Philips to considerably 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 EUR 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.

Philips also recognizes the benefits provided by the cutting-edge technology of SuperPower, Intermagnetics' energy technology subsidiary, and will actively consider the most efficient way to achieve its potential.

In 2005, total MRI market was approximately EUR 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. MRI 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.

Intermagnetics' headquarters in Latham, NY, USA, will become the global headquarters of Philips' enlarged magnetic resonance business.



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