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


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


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


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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