Fluke Buying Philips' Test Unit

In a continuing effort to broaden its business worldwide, John Fluke Manufacturing Co. Inc. of Everett said today it will acquire the test and measurement operations of Philips Electronics N.V. of Eindhoven, The Netherlands.

Fluke, which produces compact, electronic test tools, has had a five-year alliance with the Dutch company, one of the world's largest electronics companies with sales of $30.3 billion last year and 238,700 employees.

Fluke will acquire most of Philips' test and measurement operations for cash and stock in the next few months. The company refused to disclose the value of the deal, saying details would be available in a proxy statement to be issued to shareholders in November. Philips stock was trading early today on the New York Stock Exchange at $14.875 a share. Fluke stock, traded on the American Stock Exchange, traded at $26.75.

The transaction is expected to add about $125 million to Fluke's sales, which, in the year ended Sept. 30, were $239.7 million. Fluke officials said it also is expected to increase earnings per share, beginning in the first year of operations.

"We have had a productive alliance with Philips," said Bill Parzybok, Fluke chairman and chief executive officer.

Under the agreement, which has to be approved by Fluke shareholders and Philips' board, Fluke would assume responsibility for worldwide marketing, development, manufacturing, sales and support of most of the combined companies' present product lines. This would include the acquisition of sales and service operations in Europe, and the management of a worldwide distribution network.

Peter Musser, an analyst with Ragen MacKenzie in Seattle, said the deal should result in the development of new products. The operations will benefit with Fluke in charge, he said.

"I'm impressed with Parzybok's ability to focus on what is needed, and this should emphasize the company's strength," Musser said. He noted that Philips' side of the present operation has been weak, partly due to the European economy and the company's own restructuring. Fluke's European sales have grown this year, he said.

Fluke also would acquire operations in Almelo and Heerlen in The Netherlands and the companies' marketing and development operations in Eindhoven and Hamburg, Germany.

About 900 Philips employees would transfer to Fluke.

Fluke has been focusing on new products. Its goal, Parzybok said in February, is "to be the worldwide profit and volume leader in compact, professional electronic tools."