The U.S. Department of Justice (DOJ) has blessed the marriage between Philips Medical Systems and Agilent Technologies’ Healthcare Solutions Group (HSG). Russia, Canada, and Brazil must still clear the union, but Agilent and Philips are upbeat
The U.S. Department of Justice (DOJ) has blessed the marriage between Philips Medical Systems and Agilent Technologies’ Healthcare Solutions Group (HSG). Russia, Canada, and Brazil must still clear the union, but Agilent and Philips are upbeat about the prospects for successful closure. Regulators for countries in the European Union approved the deal in March. DOJ was the big worry, according to spokespersons from both companies. Now they believe the merger could be complete by end of summer.
The reinvigorated optimism concerning the $1.7 billion deal, announced in November, has fueled speculation about how it might affect product lines, as well as the companies themselves. While many new corporate parents seek to maintain name recognition by keeping the brand names of products in newly acquired companies, it’s not clear that’s the best way to proceed in this case. Agilent expended considerable effort to connect the Hewlett Packard tradition of high-quality ultrasound equipment with the Agilent name, but whether that process was sufficient to merit a similar effort by Philips to keep the Agilent branding is arguable.
Another point of speculation is whether Philips Medical Systems will change its name. Expanding its product offerings beyond ultrasonography to include, for example, defibrillators and patient monitors might warrant a change to Philips Medical Solutions, particularly since these products had been under Agilent’s Healthcare Solutions Group marquee.
Executives for the companies declined to discuss the merger with DI SCAN. Spokespersons say comment is premature because discussion of the myriad details involved in the proposed merger began only after the DOJ decision was rendered. Those discussions may be shifting into high gear, however, to provide answers to questions that will inevitably arise when the two companies exhibit at the annual meeting of the American Society of Echocardiography, June 28-30, in Seattle.
Meanwhile, there appears to be little concern that the deal might go awry. Financial data in Agilent’s 10-Q filing to the Securities and Exchange Commission for the second quarter, end April 30, described HSG as a discontinued operation.
But with so many activities being channeled toward merger, continued delay in finalizing the deal could hurt Agilent. Expenses associated with the divestiture of HSG accounted for $27 million in the second quarter. Earnings are also being affected by weak demand for products. Much of the company’s backlog was met in the second quarter. Executives forecast continued weakness in sales. The downturn in revenue has been attributed to industry-wide conditions, particularly outside the healthcare group.