Dec. 21 (Bloomberg) -- Royal Philips Electronics NV, the world's biggest manufacturer of patient-monitoring systems, agreed to buy medical-equipment maker Respironics Inc. for 3.6 billion euros ($5.2 billion) in its largest-ever acquisition.

Philips will pay $66 a share in cash, the Amsterdam-based company said in a statement today. The offer is 24 percent higher than yesterday's closing price. Respironics, based in Murrysville, Pennsylvania, makes masks and ventilators to use in patients' homes for the treatment of breathing disorders.

The deal brings Philips's spending on acquisition and share buybacks to more than 20 billion euros since 2005. Chief Executive Officer Gerard Kleisterlee is using proceeds from selling semiconductor holdings to bolster the medical and lighting divisions and return cash to investors. Philips, which competes with General Electric Co. and Siemens AG, forecasts operating profit per share will more than double by 2010.

``This is a sensible move,'' said Rene Verhoef, an analyst at Fortis in Amsterdam. ``It's a clear step in home care, which is growing fast and the margins are high.'' Verhoef recommends buying Philips stock.

Kleisterlee said earlier this year that Philips would have as much as 20 billion euros available for acquisitions, dividends and buybacks over the next three years. On Nov. 26, the company announced the $2.7 billion takeover of lighting- fixtures maker Genlyte Group Inc., its largest purchase until today. On Dec. 19, the company said it would buy back 5 billion euros of stock in the next two years, its biggest such program ever.

More Takeovers

Philips will continue looking at possible takeovers, Kleisterlee said on a call with analysts today.

Respironics rose $12.21, or 23 percent, to $65.32 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 73 percent this year, versus a 20 percent increase for the S&P 600 Health Care Index.

``We quite like the acquisition,'' said Janardan Menon, a Dresdner Kleinwort analyst in London who recommends buying Philips stock. ``The only thing we would question is why they didn't do it earlier,'' Menon said, citing the increased share price of Respironics.

The purchase values Respironics at 36.3 times profit for the past year, above the average price-earnings multiple of 27.7 for a group of 20 U.S. medical-device makers tracked by Bloomberg.

The takeover will lead to cost savings of $50 million by 2010, Philips said. The purchase will enhance sales by $180 million by 2012 as the companies will use each other's distribution network to sell products, Chief Financial Officer Pierre-Jean Sivignon said on a call with reporters.

Takeovers, Buybacks

Since 2005, Philips completed or announced more than 10 billion euros of takeovers and 10.2 billion euros of share buybacks. The company received more than 12 billion euros of proceeds from divestments over the same period.

Philips plans to have sold its remaining stake of about 8 percent in Taiwan Semiconductor Manufacturing Co., the world's largest customized-chip maker, by 2010. It also aims to bring down its holding in LG.Philips LCD Co., the world's second- largest maker of liquid-crystal displays, to ``a few percentage points'' by the end of 2009 from 19.9 percent now, Sivignon said.

This week, Philips announced the sale of its set-top box and connectivity solutions units to Pace Micro Technology Plc in exchange for 70 million Pace Micro shares.

The Pace Micro stake will ``technically be available for sale,'' as it's not considered to be ``of strategic nature,'' Kleisterlee said.

Philips fell 60 cents, or 2 percent, to 30.11 euros in Amsterdam trading. The stock has gained 5.4 percent this year, compared with a 3.7 percent gain for the benchmark Amsterdam Exchanges Index.

``With two major acquisitions and the buyback announcement, there are fewer positive triggers to drive the shares,'' said Wing-Yen Choi, an analyst at Theodoor Gilissen in Amsterdam, who recommends buying the stock. ``Now investors will wait to see if the acquisitions will really add to earnings.''

To contact the reporters on this story: Jeroen Molenaar in Amsterdam jmolenaar1@bloomberg; Marcel van de Hoef in Amsterdam at mvandehoef@bloomberg.net.

Last Updated: December 21, 2007 16:17 EST