Amsterdam, the Netherlands and Murrysville, Pennsylvania, USA - Royal Philips Electronics (AEX: PHI, NYSE: PHG) ("Philips") and Respironics, Inc (Nasdaq: RESP) announced a definitive merger agreement pursuant to which Philips will commence a tender offer to acquire all of the outstanding shares of Respironics for USD 66 per share, or a total purchase price of approximately EUR 3.6 billion (USD 5.1 billion) to be paid in cash upon completion. This transaction will firmly place Philips as a global leader in the fast-growing home healthcare market by adding new product categories in obstructive sleep apnea and home respiratory care to its existing businesses in this field. In addition, this acquisition will be highly complementary to Philips' patient monitoring businesses in the hospital setting. The board of directors of Respironics has unanimously approved the transaction and recommends the offer to their shareholders.

Respironics, based in Murrysville, Pennsylvania, USA, is the leading provider of innovative solutions for the global sleep therapy and respiratory markets. The fast-growing company develops, manufactures, distributes and markets innovative products in the field of respiratory medical technology, which are used in both home settings as well as in hospitals and clinics. Respironics has approximately 5,300 employees worldwide.

"Respironics is an excellent strategic fit and will significantly drive our growth in healthcare both in the hospital and in the home," said Gerard Kleisterlee, President and Chief Executive Officer of Royal Philips Electronics. "The acquisition of Respironics is another major milestone towards the completion of our objective to build market leadership positions in high-growth, high-margin businesses across the three market sectors of healthcare, lighting and consumer lifestyle. It is also another significant step in our continuing capital re-allocation process. With about EUR 10 billion worth of closed or announced acquisitions since 2005 and EUR 10.2 billion of realized or announced share repurchase programs during the same period, we are well on track to deliver an efficient balance sheet before the end of 2009."

Almost three-quarters of Respironics' sales are achieved in the company's Sleep and Home Respiratory business which consists of diagnostic and therapeutic devices for sleep disordered breathing and chronic respiratory diseases. Respironics is a global leader in the treatment of Obstructive Sleep Apnea (OSA), a condition characterized by the repeated cessation of breathing during sleep. It is estimated that in the United States alone there are 18 - 20 million sufferers of moderate or severe OSA of which only 15 - 20% have been diagnosed. Research in recent years has shown a link between OSA, heart disease, stroke and diabetes. Additionally, the company has a leading position in noninvasive ventilation and has recently introduced new home oxygen technologies to serve the needs of respiratory impaired patients in the home. The remainder of the Company's business is focused on the hospital channel and includes noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug delivery technologies for the treatment of respiratory diseases.

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