Royal Philips Electronics (NYSE: PHG, AEX: PHI) ("Philips") and Health Watch Holdings, Inc. ("Health Watch") have announced Philips will acquire Health Watch, a US-based, privately-held provider of personal emergency response services, for approximately USD 130 million in cash. The transaction is expected to close in the second quarter of 2007.

"The acquisition of Health Watch builds on our successful acquisition of Lifeline Systems last year, and will allow us to leverage Lifeline's existing investments in monitoring and service infrastructure and its roadmap of innovative products across a larger subscriber base," said Ivo Lurvink, CEO and Executive Vice President of Consumer Healthcare Solutions. "Through this move we expect to further increase the value-creating potential of Lifeline's personal emergency response business," Lurvink added.

The acquisition of Health Watch represents a further step for Philips in building up its presence in the consumer healthcare market -- a business-to-consumer market, where consumers generally purchase healthcare products and services. Health Watch will add over 100,000 US-customers to Philips Lifeline's existing base of more than a half a million subscribers in North America, thereby further expanding Philips' presence in the region's personal emergency response market. The deal will also increase the number of healthcare organizations and healthcare referral sources in the Philips Lifeline network, further contributing to future growth.

Philips Lifeline's and Health Watch's twenty-four hour a day services give independently minded seniors the confidence to maintain an active life at home, knowing if they suddenly need help, they can send an alert to a monitoring center indicating they need assistance. Two-way communication allows a professionally trained operator to establish the nature of the problem so that appropriate action can then be taken.

Seniors and their families are increasingly looking for home healthcare solutions that let at-risk seniors manage their health and wellness. And an aging population provides strong underlying market growth for the solutions offered by Philips Lifeline and Health Watch. Since being acquired by Philips in the first quarter of 2006, Lifeline Systems' sales grew in excess of 15%. Today, seniors represent around 15% of the population in the developed world, and that number is expected to almost double in size over the next 25 years. Personal emergency response services are already the largest category of home healthcare solutions purchased out-of-pocket by older adults and their caregivers. Still, penetration in the age group 65 years and older is just 2 to 3 percent, allowing for significant future growth.