Philips Completes Health-Tech Shift With $4.37 Billion Home Appliances Sale -- Update

--Sale of domestic-appliances unit concludes Philips' major divestments

--The deal with China's Hillhouse Capital includes a 15-year brand license agreement worth EUR700 million

--CEO says Dutch company will continue to look for potential acquisitions

By Adria Calatayud and Jaime Llinares Taboada

Koninklijke Philips NV said Thursday that it has agreed to sell its home appliances business for 3.7 billion euros ($4.37 billion) to Chinese investment firm Hillhouse Capital, a deal that concludes Philips's major divestments and completes its shift toward health technology.

The Dutch company said last year that it would review options for its domestic appliances business, which houses kitchen, coffee, garment care and home care appliances and generated sales of EUR2.2 billion in 2020. The company also considered an initial public offering, but opted for a sale in light of strong interest from potential buyers, it said.

Philips said it expects to receive EUR3 billion in cash for the sale after taxes and transaction-related costs. The deal also includes a 15-year exclusive brand license agreement for an estimated value of EUR700 million over the period, resulting in a total transaction value of EUR4.4 billion.

The deal is expected to be completed in the third quarter of 2021.

"This transaction concludes our major divestments," Philips Chief Executive Frans van Houten said in a call with reporters.

After closing the sale of its home-appliances activities, the company will still own consumer-focused operations like its personal care, oral care or child care activities, but they all play an important role in its health-focused future and Philips has no intention to divest them, Mr. van Houten said.

The sale won't fund new deals, as Philips has agreed to three acquisitions --BioTelemetry, Capsule Technologies and Intact Vascular-- in the last five months and those already took into account expected proceeds from the domestic-appliances deal, its CEO said.

"In a way, you could say that we have already spent the money," Mr. van Houten said. "We will continue to look for opportunities in a very disciplined way," he added.

Write to Adria Calatayud at [e-mail] and to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

March 25, 2021 07:54 ET (11:54 GMT)

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