Hillhouse Capital has agreed to acquire Royal Philips’ domestic appliances business. The purchase price is 3.7 billion euros. The deal is expected to close in the third quarter of this year.
Amsterdam, the Netherlands – Royal Philips (NYSE: PHG; AEX: PHIA), a global leader in health technology, today announced that it has signed an agreement to sell its Domestic Appliances business, a global leader with EUR 2.2 billion sales in 2020 in kitchen, coffee, garment care and home care appliances, to Hillhouse Capital, a global investment firm focused on helping companies achieve long-term sustainable growth through digital innovation and enablement. The transaction is expected to be completed in the third quarter of 2021, subject to customary closing conditions, including the relevant regulatory approvals.
The transaction values the Domestic Appliances business at an enterprise value of approximately EUR 3.7 billion. Upon completion of the transaction, Philips expects to receive cash proceeds after tax and transaction-related costs of approximately EUR 3 billion. Additionally, Philips and Domestic Appliances will enter into an exclusive brand license agreement to use the Philips brand and certain of Philips’ other domestic appliances brands for manufacturing, sales, and marketing of Domestic Appliances products globally for a period of 15 years, which is renewable subject to the terms of the brand license agreement. The annual payments over this period represent an estimated net present value of approximately EUR 0.7 billion, resulting in a total deal value of approximately EUR 4.4 billion. Following today’s agreement, the Domestic Appliances business will be presented as a discontinued operation in Philips’ financial statements as of the first quarter of 2021.
I am pleased that in Hillhouse Capital we have found a new home for the Domestic Appliances business to further expand on its market leadership, strong brand and pipeline of new innovations.
Frans van Houten
CEO of Royal Philips
“I am pleased that in Hillhouse Capital we have found a new home for the Domestic Appliances business to further expand on its market leadership, strong brand and pipeline of new innovations,” said Frans van Houten, CEO of Royal Philips. “This transaction concludes our major divestments. Going forward, our focus is on extending our leadership in health technology and continuing our transformation into a solutions company supporting professional healthcare customers achieve the Quadruple Aim and consumers with their personal health.”
Philips is a leading provider of integrated solutions to improve people’s health and well-being and optimize care provider productivity across the health continuum from healthy living and prevention, to diagnosis, treatment, and home care. Philips’ EUR 3.2 billion Personal Health businesses play an important role in the company’s integrated health continuum approach through consumer-driven product and solutions innovation in areas such as oral healthcare, personal care, and mother & child care.
Hillhouse Capital invests globally with the aim of working with entrepreneurs and management teams to build high quality businesses that achieve sustainable long-term growth. Hillhouse has deep experience in integrating technology and data-driven architectures to drive digital innovation and business expansion. The firm has worked successfully with many global consumer and retail businesses to deepen consumer engagement and introduce innovative direct-to-consumer models, growing new customer segments and markets.