Philips in $5 billion Respironics deal

By Foo Yun Chee and Niclas Mika

AMSTERDAM (Reuters) - Philips (PHG.AS: Quote, Profile, Research, Stock Buzz) plans to buy U.S. sleep therapy products maker Respironics Inc RESP.O for $5.1 billion, its largest deal to date in an aggressive expansion in the fast-growing health-care sector.

Philips has been on a shopping spree in recent weeks, agreeing to buy U.S. lighting maker Genlyte Group GLYT.O for $2.7 billion and medical systems and services provider Visicu EICU.O for $430 million.

Together with a 5 billion euro share buyback announced this week, the acquisitions are a leap forward in Philips' efforts to reduce its cash pile and return to a leveraged balance sheet by the end of 2009.

"We have passed the 10 billion euro mark twice -- for closed and announced acquisitions as well as for the total of realized and announced share buybacks," Philips Chief Executive Gerard Kleisterlee told journalists on a conference call.

"In total, we are talking about a reallocation of over 20 billion euros of capital since 2005," he said.

Philips -- the world's biggest lighting maker, a top three hospital equipment maker and Europe's biggest consumer electronics producer -- said it would pay $66 per share for Murrysville, Pennsylvania-based Respironics, a 24 percent premium to its Thursday closing price.

The acquisition will add to earnings from the beginning, Philips said.

The purchase price amounts to about 22.5 times expected 2008 earnings before interest, tax and amortization.