Philips said on Wednesday it plans to spend the equivalent of €1.9bn on US company Spectranetics, which specialises in making equipment for surgery to treat cardiac and vascular disease.

Both companies’ management have agreed to the deal, which will be completed in the third quarter of the year. Philips is offering $38.50 per share for Spectranics, which is a premium of 27% on Tuesday’s close.

Philips says the acquisition will ‘further expand and strengthen’ Philips’ image-guided therapy business group. Spectranetics, which shows double digit growth, expects 2017 sales to be in the range of $293m to $306m, the Dutch company said.

Philips also said on Wednesday it has reserved €1.5bn to buy back its own shares. The extra cash comes from the reduction of its interest in Philips Lighting.