Philips to acquire Avent Holdings

Subject to receipt of regulatory approval, Philips will acquire AVENT from the private equity firm Charterhouse Capital Partners LLP for approximately £ 460 million (approximately EUR 675 million) to be paid in cash upon completion of the transaction. The transaction is expected to close in the third quarter of 2006, and AVENT will be integrated into Philips' Domestic Appliances and Personal Care division. “We view the health and well-being of mothers and infants as a key future market for Philips. Through this acquisition, we can build on Philips' leading position in Europe in baby monitors to become a leading provider of products in this market,” said Mr. Andrea Ragnetti, CEO of Philips Domestic Appliances and Personal Care division. “AVENT is recognized as a premium mother and baby care brand, while Philips' brand is strongly associated with healthcare and advanced electronics designed around the consumer. So together, we see an excellent opportunity for emerging as a strong player in this growing market,” Mr. Ragnetti added. For the 12 months ending March 2006, AVENT reported sales of approximately £ 113 million (approximately EUR165 million) – representing a growth in sales of 12% over the previous 12 months, and an operating margin of 22%. Philips anticipates the acquisition to be accretive to margins from 2007 onwards. Over the next fiveyears, it is expected that sales growth will significantly outpace the market. To achieve this growth, Philips will combine AVENT's well-established position in the UK and US markets and premium mother and baby care consumer brand with Philips' extensive global reach, to expand AVENT's activities – in particular into Asia and emerging markets. Through co-branding, Philips will create a premium product category through which future mother and baby care products – also increasingly with electronic components – can be introduced. Philips also expects to improve the efficiency of AVENT's activities as they are scaled up, while leveraging both company's mass retail and dedicated specialty sales channels. In commenting on the acquisition, Elisabeth Christie, CEO of AVENT Holdings Ltd. said, “We see teaming up with Philips as a good fit for AVENT's long-term growth plans. When it comes to the health and well being of mothers and infants, both our companies put the consumer first. We also both recognize that through strong consumer insights and premium products, we can achieve a leading position in the market. We look forward to working with a global leader in electronics, to continue bringing out innovative mother and baby care products.” As Philips continues expanding its business activities across the entire care cycle, AVENT will provide a platform for Philips growing its consumer health & wellness activities further. Founded in 1984, AVENT manufactures bottle, breast and toddler feeding products. The company is the market leader in the United Kingdom, is among the top three manufacturers in its category in the United States, and has sales in over 60 countries. AVENT is widely recognized as a premium brand as reflected by its many consumer, professional and industry awards. The company also enjoys very high brand recognition and leading market positions. Furthermore, AVENT has a reputation for technological innovation – having introduced the first steam sterilizer, first single handed breast pump, the first breast pump to imitate a baby's suckling action, and the first and only feeding bottle to be clinically proven to reduce colic. Valued at approximately EUR 7 billion, the addressable market in mother and baby care products – such as safety and monitoring products, health and personal care products, feeding accessories and early learning aids – is expected over the next 5 years to grow on average per year by approximately 5% in developed markets and 10% in emerging markets. In developed markets, the trend toward an aging population with a greater number of grandparents and older first time parents is resulting in higher spending per baby. In emerging markets, such as China, per capita spending on baby care products is also rising due to increased wealth and a higher portion of disposable income spent on infants and children.