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Optiva likes Philips deal

SNOQUALMIE — Calling it a marriage of compatible


cultures, Snoqualmie-based Optiva Corp. announced last week that it would


become part of Royal Philips Electronics, the manufacturer of a wide


range of products, from semiconductors to flat-screen televisions to electric


shavers.


According to the company officials, Optiva will become part of


the Philips Domestic Appliances and Personal Care division, or DAP. No


layoffs are expected as a result of the agreement. Optiva Chief


Executive Officer Dave Giuliani said the deal should be finalized within 60 days


and is subject to regulatory approval. Terms of the buyout were not


disclosed.


The announcement came after almost a year of on-and-off-again


talks between the two corporations, which started after Optiva executives


decided last year not to go ahead with a proposed initial public offering of stock.


Giuliani said when he looked at the Netherlands-based Philips, he


found a business that had a lot in common with Optiva, which he started in 1988.


"The biggest determinant of whether a merger succeeds is that


of the compatibility of the two companies' cultures," he said.


"The most important thing to me was they are good human beings."


In Optiva, Philips saw a company that would give the Dutch


conglomerate a real presence in the dental-care market.


"Optiva has done a phenomenal job of building a dental base in


the United States," said Rich Sorota, senior vice president of marketing


for Norelco Consumer Products Co., which is part of Philips DAP.


"This acquisition will make Philips oral care the No. 2 brand


in the world."


As part of Philips DAP, Giuliani said Optiva, which manufactures


its Sonicare toothbrush in Snoqualmie and has a distribution center in


Auburn, will have greater access to markets and new technology.


"They're very good for our business because of their electronic


capabilities," Giuliani said. "They have


the technological capacity to help Optiva's new products to become pretty


amazing."


Optiva spokesman Kevin Bush said Philips "also brings


incredible resources in (research and design). That kind of R&D capability will


only accelerate our own ability to generate new products."


In all, Philips has 232,433 employees in 60 countries around the


world. The Philips DAP division is the global leader in electric shavers.


Giuliani, however, will not lead the company into its new era, although


he will stay on as a consultant. Bush said Giuliani will focus on a spinoff


that resulted from the Philips-Optiva deal, Junipa Labs. The new venture,


which Bush said initially started as an off-shoot to Sonicare, will create


oral-care products like mouthwash and toothpaste and will be based in Bellevue.


Jack Gallagher, Optiva's president and chief operating officer, will


lead the company after Giuliani's departure.


As the No.1 manufacturer in the U.S. power toothbrush market,


Bush said Optiva, which currently employs more than 600 people, has been


looking to get bigger.


"David (Giuliani) has recognized that the company needed what


you might call a `liquidity event,'" Bush said.


As well as the infusion of money from Philips, its status as a


worldwide competitor in electronics will help Optiva reach new consumers.


"We've done very well to become a dominant leader in the U.S., but


only 10 percent of our sales come from overseas," Bush said. "Philips is a


global company with distribution worldwide; they already have those


systems in place."


More than 7 million Sonicare toothbrushes have been sold


worldwide, and last year, Optiva had sales of $175 million. The toothbrushes


are sold at more than 32,000 retail outlets and at dental offices.


The Sonicare toothbrushes differ from other electric toothbrushes


by using sonic waves and brushing at a speed of 31,000 strokes per minute.


News of Optiva's acquisition by Philips comes more than two


years after Philips bought Bothell-based ATL Ultrasound for


approximately $800 million. ATL Ultrasound is now part of the Philips Medical


Systems division, and Philips recently announced the division's


headquarters will move to Bothell.


Both Giuliani and Sorota said Philips will move its worldwide


oral-care operations to Snoqualmie. Bush said it is too early to tell whether


it will be on the same order as Philips Medical Systems move to Bothell.


Giuliani said space is available if Philips decides to expand.


"Optiva has an option on adjacent land, so we expect that Philips


may well want to utilize that," he said.


Bush said workers at the Snoqualmie facility have known


for some time that a deal like the one with Philips was likely, and they seem


to be happy with the decision. And other than a new parent company,


the changes will be few.


"(Philips tends) to be fairly hands-off in running the company," he


said. "They allow the companies they run to operate pretty autonomously.


"There will be a change, but we're confidant it will only be a good


change and we'll be able to maintain the same culture that has helped us become


a world leader in our industry," he said.

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