Dutch electronics giant Philips announced Wednesday it was buying US-based medical imaging company Volcano for $1.2 billion, as it sought to strengthen its hold on the high-margin healthcare technology market.
"Philips is to acquire Volcano for $18 per share (with) a total transaction value of $1.2 billion (962 million euros)," the Amsterdam-based Philips said in a statement.
The agreement to buy the San Diego-based Volcano, which makes catheter-based imaging and advanced blood flow measuring equipment, "advances Philips’ focused strategy in image guided therapy," it said.
Philips added: "There is an increasing trend to use advanced catheters that are capable of producing ultrasound images of the interior of blood vessels or perform blood flow measurements."
The deal to buy Volcano should speed up Philips' sales growth "as the combined business is optimally positioned to address unmet needs in the 4.0 billion-euro image guided therapy market," Philips said.
The deal is expected to be closed in the first quarter of 2015.
Philips announced in September it was splitting the company in two, separating its healthcare-lifestyle division from its historic lighting business in a dramatic move to streamline the 120-year-old giant.
Analysts said the move allowed Philips to expand its global healthcare technology arm, worth more than 100 billion euros, with its lighting division likely to be put up for sale in the future.
Philips, a household name around the world for home appliances, has already in recent years stripped down its business to focus more on advanced lighting technology and on medical technology where margins are strong and less vulnerable to competition from emerging markets.
Philips already claims to sell one in every three interventional X-ray machines sold globally.
Last year, Philips announced the sale of its lifestyle entertainment branch, which makes stereos and DVD players, after selling its troubled TV-making arm in 2012.
Founded in 1891, the company employs around 112,000 people worldwide.
Volcano last year clocked up sales worth $400 million and employs 1,800 people.