Philips to acquire personal emergency response company Lifeline Systems

Amsterdam 19 January 2006Royal Philips Electronics has signed a definitive merger agreement with Lifeline Systems Inc. under which Philips will acquire Lifeline, an expert in personal emergency response services. Philips has agreed to acquire Lifeline for USD47,75 per share or a total equity value of USD750 million - equaling an aggregate value of USD690 million net of USD60 million cash and cash equivalents - in a transaction that has been unanimously approved by the Board of Directors of Lifeline. Completion of the transaction is subject to the terms and conditions of the merger agreement, which contains customary closing conditions and is subject to the approval of Lifeline's shareholders.

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"The acquisition of Lifeline is an important step on our roadmap for growth in health care", stated Gerard Kleisterlee, President and CEO of Royal Philips Electronics. "By targeting seniors and other people who want to continue living independently and exerting more control over their health and lifestyle", he added, "we aim to become a global player in the evolving home health care market."

The aging of the population provides strong underlying market growth for home health care solutions such as those offered by Lifeline. Today, seniors represent around 15 percent of the population in the developed world and are expected to almost double in size over the next 25 years. At the same time they are becoming increasingly active in managing their own health and wellness. Personal response services are already the largest category of home health care solutions purchased out-of-pocket by older adults and their caregivers. Still, penetration in the age group 65 years and older is just 2-3 percent, allowing for significant future growth.

Lifeline's revenues in 2005 are expected to be approximately USD150 million, representing a 15 percent increase over 2004. A large part of the revenues are recurring in nature. Lifeline's operating margins in 2005 are expected to be approximately 15 percent. The company has a broad market presence in the United States and Canada. The company markets its services through a network of more than 2500 hospitals and other health care providers and serves a subscriber base of nearly 470.000.

Lifeline's twenty-four hours a day service gives independently minded seniors the confidence to maintain an active life at home, knowing if they suddenly need help, they can send an alert to a monitoring centre that indicates that they need assistance. Two-way communication allows a caring and professionally trained operator - who has instant access to the pertinent health history and personal profile of the caller - to establish the nature of the problem. Appropriate action can then be taken, including notifying a neighbour or family member, or summoning emergency services.

"Our many years of understanding consumers and their needs have led us to identify health care at home as a key sector for us", stated Ivo Lurvink, CEO of Philips Consumer Health & Wellness. "Lifeline is a market-leader that offers us a platform for other home health care products and services. As such it complements our existing presence in telemedicine, showcased in Motiva, our advanced interactive health care system. We believe our brand, global presence, technology and innovation capabilities will accelerate the growth of the company and we're very much looking forward to working with their experienced management team and talented employees."

Lifeline President and CEO, Ron Feinstein stated: "Philips' acquisition of Lifeline represents the next phase in the continued evolution and growth of our company. This combination of two industry leaders opens up numerous product and technology synergies, as well as growth opportunities designed to both further and broaden Lifeline's founding mission of providing personal emergency response and support services to the at-risk elderly and their families to enhance their independence and quality of life."

Established in 1974, Lifeline is a provider of personal response services and emergency call systems in the United States and Canada. As of September 30, 2005, the company expects to report, as per 31 December 2005, it supported nearly 470.000 subscribers from its response centres in Massachusetts, Ontario and Québec. Lifeline also supplies emergency response equipment and services to owners and developers of independent and assisted living and continuing care retirement communities across North America. To people who live alone or in senior living communities, as well as their caregivers, the company provides reassurance and peace of mind with dedicated, well-trained people, advanced technology and a nationwide support structure designed to achieve service excellence. The company is committed to affording Lifeline subscribers and senior living residents the dignity, privacy and respect to which they are entitled.

Royal Philips Electronics of The Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of 30,3 billion euro in 2004. With activities in the three interlocking domains of health care, lifestyle and technology and 160.900 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring. More Philips news is available in the VMW November 2005 article Philips unveils radiation oncology advances to help improve cancer therapy planning and delivery.


Leslie Versweyveld

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