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August 04, 2015 at 08:05 AM
(Bloomberg) — Royal Philips NV is working with Bank of America Corp. (NYSE:BAC) as it scouts for acquisitions in medical devices to expand its health care division, according to people with knowledge of the matter.
See also: St. Jude to acquire implant maker Thoratec for $3.4 billion
While the process is preliminary and no specific targets have been identified, Philips would consider smaller acquisitions as well as multibillion-euro deals over the next six to 12 months, said the people, who asked not to be identified because the plans are private. Shares of Elekta AB, a Swedish device maker, surged the most in more than five years on speculation that it might be a target.
The budget for purchases may increase depending on other potential asset disposals, the people said. The company also could use the proceeds from an initial public offering or sale of its lighting division. Philips is reviewing options for that business, which it plans to sell as soon as next year.
Philips is eyeing medical-device companies in areas such as radiotherapy, imaging and home care both in the U.S. and in Europe, the people said. In December, Philips agreed to buy Volcano Corp. for $1.2 billion to expand in catheter-based imaging of the heart and blood vessels as part of a wider refocus on more profitable markets such as medical gear.
See also: House votes—again—to repeal PPACA tax on medical devices
Medical-device companies including Elekta and U.S.-based Varian Medical Systems Inc. could be targets for Philips, said Johan Unnerus, an analyst at Swedbank AB in Stockholm, who recommends buying Elekta stock. Elekta and Varian compete in making equipment for radiation therapy and radiosurgery.
