Royal Philips has completed the €3bn sale of its Domestic Appliances business a part of its move to a health technology company.
The deal with private equity firm Hillhouse Capital was announced in March and will be reported under discontinued operations in the third quarter of 2021. The headquarters will remain in Eindhoven but will create a consumer company competing with companies such as Dyson with revenues of $7.5bn and Miele at $4.5bn.
The transaction values Domestic Appliances at around €3.7bn. It had €2.2bn sales in 2020 in kitchen, coffee, garment care and home care appliances. The total deal value amounts to approximately €4.4bn including an additional 15-year brand license agreement with annual payments worth €700m.
“I am pleased that in line with our plans we have completed this transaction and concluded our major divestments,” said Frans van Houten, CEO of Royal Philips. “I am confident that the Domestic Appliances business will be able to expand on its market leadership with the support of Hillhouse Investment. In the past 12 months, Philips has further strengthened its portfolio with the launch of new products and solutions, as well as the acquisitions of Intact Vascular in image guided therapy, and BioTelemetry and Capsule Technologies in connected care. We are executing on our strategy to deliver integrated solutions that support professional healthcare customers achieve the Quadruple Aim and consumers with their health.”
“We are in a great position to continue bringing meaningful innovations to the consumer’s home in areas such as kitchen, coffee, garment care and home care appliances,” said Henk de Jong, CEO of Domestic Appliances. “We look forward to embark on this new partnership with Hillhouse Investment, building on our longstanding consumer, customer and partner relationships, as well as our market leading positions across our portfolio and the brand license partnership with Philips.”
Following the sale of Domestic Appliances, Philips retains its €3.2bn Personal Health businesses as part of it’s integrated health continuum approach for healthy living and prevention of diseases.
Hillhouse is backed by US universities including Yale, Stanford and Princeton and has strong links in China with investments in Tencent and JD.com, but has also invested in an organic baby food and snack manufacturer called Little Freddie, a Californian craft beer maker and a pet food brand.