A definite merger agreement has been announced between BioTelemetry, Inc. (NASDAQ:BEAT) and Royal Philips (NYSE: PHG, AEX: PHIA). Royal Philips is a global leader in health technology and BioTelemetry is a leading provider of remote cardiac diagnostics and monitoring based in the U.S. In accordance to the merger agreement, Royal Philips has offered to acquire all of Telemetry’s issued and outstanding shares, for USD 72.00 per share. An ammount that is to be paid in cash upon completion of the acquisition. This number represents a 16.5% premium to BioTelemetry’s closing price on the 17th of December 2020. Including BioTelemetry’s cash and debt, the enterprise value is said to be USD 2.8 billion, an equivalent of EUR 2.3 billion. The transaction has been approved by Telemetry’s board of directors and has recommended the offer to its shareholders. During first quarter of 2021, the transaction is expected to come to completion.
Philips, what with its cardiac care portfolio and its plan make a transformation in the delivery of care along the health continuance with integrated solutions, found an excellent and strong fit by acquiring BioTelemetry. Philips holds a leading position in patient monitoring in the hospital, whereas BioTelemetry holds the lead in cardiac diagnostics and monitoring outside of the hospital. The combination of the two companies will ultimately create a global leader in patient care management solutions for the hospital and the home for cardiac and other patients. Included in Philips portfolio as of now is real-time patient monitoring, telehealth, informatics and therapeutic devices. Additionally, optimized for delivering healthcare across care settings, Philips has a secure and modern Philips HealthSuite digital platform that is cloud-based. Each year 10 million sleep and respiratory care in-home patients as well as 300 million hospital patients are monitored by Philips integrated solutions.
Frans Van Houten, the CEO of Royal Philips mentioned that acquiring BioTelemetry aligns perfectly with the company’s strategy to become a leader in providing patient care management solutions both for the hospital and the home. He continues by stating how the fact that Philips is the leader in the hospital will be complemented by BioTelemetry’s leadership in the ambulatory cardiac diagnostics and monitoring market; a market that is constantly expanding. By combining both companies’ expertise they will be able to improve patient care across care settings for multiple medical conditions and diseases.
The President and CEO of BioTelemetry, Joseph H. Capper, said that the company has managed to develop the largest remote cardiac monitoring services network in the world, through continued innovation. Capper continues by expressing BioTelemtry’s delight in being a part of Philips and the opportunity to continue to deliver health information in order to reduce care costs and improve quality of life. BioTelemetry is fully equipped to deal with the increasing demand for telehealth and remote monitoring with the combination of Philips patient care management portfolio, innovative strength and international scale.
85% of BioTelemetry’s sales comes from their primary focus, diagnosis and monitoring of heart rhythm disorders. Wearable heart monitors (an extended Holter monitor and a mobile cardiac outpatient telemetry patch) that can detect and transmit abnormal heart rhythms wirelessly, AI-based data analytics and services are some of the clinically validated offerings included in BioTelemetry’s services. Over one million patients per year receive services from BioTelemetry, that boast over 30,000 unique referring physicians each month. Moreover, providing testing services for clinical trials, BioTelemetry, has a clinical research business. Pushed forward by the rising prevalence of chronic diseases and the choice of using remote monitoring and outcome-oriented models, the total market value is at USD 3+ billion.
Financial Details
When the transaction is completed, Philips’ Connected Care business segment will have acquired BioTelemtry and its workforce of 1,900. A projection of the acquisition is a growth in sales and an adjustment in EBITA margin accretive for Philips in the following year. Especially in the U.S., noteworthy synergies are targeted by Philips, driven by the opportunities presented by cross-selling. Philips also targets portfolio innovation synergies, such as the Philips’ Health Suite digital platform and georgraphical expansion. Philips will also make operational performance improvements by way of its proven productivity programs. The expectations for the BioTelemetry business is a double-digit growth and an improvement to its Adjusted EBITA margin by more than 20% by the year 2025.
Transaction Details
The structure of the transaction is as a cash tender offered by Philips for all of the issued and the outstanding shares of BioTelemetry, which will be followed by a merger. In this merger, BioTelemetry’s shares that are not tendered in the tender offer (minus the shares that Philips and some of its affiliates hold, and BioTelemetry) will be covered into the USD 72.00 per share price paid in the tender offer. In accordance to the merger agreement, the transaction is of course, subject to customary closing conditions. Included in these conditions is the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the tender offer, however, is not subject to any financing conditions.