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Dutch-based Royal Philips Electronics (NYSE:PHG) announced Friday morning it had agreed to acquire Respironics Inc. (RESP) in an all-cash deal worth €3.6 billion ($5.17 billion). Royal Philips is best known for its home appliances and electronics products including LCD televisions and LED lights but also has a healthcare division; Respironics develops and produces medical devices for sleep and respiratory disorders. Under the merger agreement, Philips will acquire all Respironics shares for $66 a piece – a 24% premium to Thursday’s closing price of $53.11. Respironics had sales of $1.2 billion in its latest 12-month period. Respironics’ board unanimously approved the acquisition, under which the company will become the headquarters for Philips’ Home Healthcare Solutions group within Philips Healthcare. According to Philips CEO Gerard Kleisterlee, “Respironics is an excellent strategic fit and will significantly drive our growth in healthcare both in the hospital and in the home.” Kleisterlee also called the acquisition “another significant step in our continuing capital re-allocation process… we are well on track to deliver an efficient balance sheet before the end of 2009.” On Tuesday Philips announced a $7.2 billion share repurchase authorization (full story).

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Source: Royal Philips to Buy Respironics for €3.6B in Cash