Jan 26, 2001 Royal Philips Electronics (AEX: PHI, NYSE: PHG) and SHL TeleMedicine Ltd. (SWX NM: SHLTN) announced today that Philips Medical Systems and SHL have entered into a joint venture to develop new geographical markets for cardiology telemedicine products and services across Europe.
Closing of the transaction is subject to the approval of SHL TeleMedicine Ltd.’s audit committee and Board of Directors. Philips Medical Systems and SHL have agreed on an ownership structure according to which Philips Medical Systems will initially own 80.1% of the joint venture and SHL 19.9%. SHL has the option of increasing its stake to 35% over the coming years. The joint venture will allow Philips Medical Systems and SHL, an Israeli based provider of personal telemedicine systems and medical call center services, to duplicate SHL’s successful business model in targeted European markets. In addition, Philips Medical Systems and SHL have agreed on a worldwide strategic cooperation agreement that will include also joint R&D efforts.
The joint venture is headquartered in the Netherlands and will be managed by a team of experienced professionals from both Philips Medical Systems and SHL.The goal of the joint venture is to establish medical call centers and remote monitoring services for people with cardiac disease across Europe. The joint venture plans to commence operations in 2001. Countries to be covered by the joint venture include those in the European Union as well as other European countries, Eastern Europe, Switzerland, and the former members of the Soviet Union. The joint venture will exclude the UK, Portugal, and Croatia, where SHL TeleMedicine already has exclusive arrangements with other partners.
The joint venture will specialize in remote monitoring equipment and services in the field of cardiology and will be based on the same business model that SHL has successfully developed in Israel over a period of 13 years. SHL’s subscribers currently number more than 55,000 in Israel, where it has successfully leveraged its superior technology and user-friendly devices. SHL will bring to the joint venture its personal telemedicine products to provide remote monitoring services for a variety of patients, ranging from chronically ill individuals to other consumers of healthcare products who wish to take a more active role in managing their health. Individuals can transmit indications of cardiac function (including 12-lead EKG) via phone to a medical call center staffed with trained medical personnel for analysis and consulting. Call center staff may instruct patients to take additional action. If necessary, an ambulance can be dispatched. The joint venture will offer a fully integrated range of products and services: hardware and end-user products for call centers and patients, a database management application, software modules for receiving, displaying and measuring end-user data, and Internet technology allowing real-time access to subscribers’ medical records.
Hans Barella, CEO and President of Philips Medical Systems, stated: ”After the announced acquisitions of ADAC Laboratories and the proposed acquistion of Agilent Healthcare Solutions Group in the USA, we are very happy to start a new business initiative in Europe. We believe that there is a large unmet demand for personal healthcare services throughout Europe. We are very fortunate to have SHL TeleMedicine as our partner in this enterprise and have found an experienced and highly qualified management team to lead this new venture.”
Yoram Alroy, CEO and Chairman of SHL TeleMedicine observed: ”With Philips, we have found a strong strategic partner to develop our business outside Israel faster and more efficiently than would be otherwise possible. Philips is an experienced partner with a management team possessing excellent knowledge of the medical systems market, particularly in cardiology. Philips has a strong customer base ranging from hospitals to individual consumers and has a highly recognized brand name. This is an ideal strategic fit.”
Royal Philips Electronics currently holds an interest of approximately 18.57% of the outstanding shares in SHL TeleMedicine Ltd. In connection with the formalization of the strategic relationship between Philips Medical Systems and SHL, Royal Philips Electronics has decided to hold its shares in SHL TeleMedicine Ltd. directly within Koninklijke Philips Electronics N.V., the parent entity of Royal Philips Electronics. Such shares are currently held by Philips Venture Capital Fund B.V. The transfer of such shares to Koninklijke Philips Electronics N.V. will be finalized as soon as practicable after this announcement.
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 30.3 billion in 2004. With activities in the three interlocking domains of healthcare, lifestyle and technology and 161,100 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions.
