SHL Telemedicine (SWX: SHL), a provider and developer of advanced personal telemedicine solutions, has agreed to sell Raytel Cardiac Services and other ancillary operations, comprising SHL's US cardiac monitoring activities, to Royal Philips Electronics (NYSE:PHG, AEX:PHI). Philips will pay an upfront cash consideration of around $110 million plus participation in future revenues from current Raytel services and certain new products and services for up to 9 years. Philips is an 18% shareholder in SHL.
Following its acquisition of Lifeline a year ago, Philips has become the leading provider of personal response services and emergency call systems in the US and Canada. Philips markets its services through a network of more than 2,500 hospitals and other healthcare providers and serves a subscriber base of 750,000 individuals. The companies' announcement said that this transaction would enable SHL's and Raytel's existing products and services to be offered to Philips' broad client base, while generating revenue synergies. SHL says it believes that Philips' strong brand recognition among healthcare professionals should allow for the rapid introduction of new SHL products to this important market segment in the coming years.
Beside the consideration for Raytel Cardiac Services, SHL said it would also benefit from the sales of its proprietary telemedicine devices to Philips as well as from revenues emanating from Philips' access to SHL's future R&D.
The transaction, which is subject to certain regulatory approvals as well as that of SHL's shareholders, is expected to close by the fourth quarter of 2007. SHL said that, on consummation of the transaction, it would record a significant capital gain.
Wachovia Securities is acting as financial advisor to SHL in this transaction.
SHL co-CEO Erez Alroy said, "We are very excited about the agreement with Philips. This is a major achievement for SHL, strengthening our relations with our strong strategic partner with the capacity and capability to significantly increase penetration of SHL products in the North American market.
"In addition the transaction will provide SHL with significant cash resources to increase the pace of its expansion in the German market as well as development of new markets and products"
Philips' Home Healthcare Solutions CEO Ron Feinstein said, "We have known SHL and Raytel for many years and are optimistic that the addition of Raytel's cardiac monitoring capabilities to our portfolio of remote patient management services will strengthen our position in the home healthcare market for consumers with heart disease."