Philips to work with Bank of America on medical deals

Royal Philips NV is working with Bank of America as it scouts for acquisitions in medical devices to expand its health-care division, according to Bloomberg Business

While the process is preliminary and no specific targets have been identified, Philips would consider smaller acquisitions as well as multi-billion euro deals over the next six to 12 months, according to Bloomberg.

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 article on Bloomberg Business reported.

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 US and in Europe, Bloomberg reports.

In December, Philips agreed to buy Volcano Corp. for £767 million 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.

Medical-device companies including Elekta and US-based Varian Medical Systems. could be targets for Philips, said Johan Unnerus, an analyst at Swedbank in Stockholm, who recommends buying Elekta stock.

Elekta and Varian compete in making equipment for radiation therapy and radiosurgery.

Unnerus said: “Elekta would be a really good fit for Philips and the two companies know each other well as they already have a project in common.”

Elekta shares surged 9.1% to 62.50 kronor at 2:50 p.m. in Stockholm, valuing the company at 23.9 billion kronor (£1.8 billion).