PHILIPS: sale of Domestic Appliances for €3.7 billion

  •   30/03/2021 - 07h29
  •   DEHOUI Lionel

Dutch technology company Philips has announced that it has reached an agreement with Chinese group Hillhouse Capital for the sale of Domestic Appliances. This is its "domestic appliances" business. The transaction should be completed in the next few days for a sum of 3.7 billion euros. This acquisition will enable the Chinese company to expand into new markets and seize more growth opportunities worldwide.

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PHILIPS: sale of Domestic Appliances for €3.7 billion
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About the sale of Philips' home appliances business to Hillhouse Capital

The Dutch Philips Group has been in negotiations for some time with the Chinese investment company Hillhouse Capital. This is part of the deal to sell Philips' Domestic Appliances business to the Chinese group. Finally, the two companies have reached an agreement to complete the sale.

Hillhouse Capital's objective in this acquisition is to help the companies in their ambition to achieve long-term sustainable growth. Thus, the acquisition of Philips' home appliances business remains a real opportunity to achieve this vision.

The transaction is valued at approximately EUR 3.7 billion (enterprise value). The transaction is expected to close in the third quarter of 2021. Upon completion of the divestiture, the Dutch group is expected to receive cash proceeds after taxes and transaction-related costs. This is estimated to be around €3 billion.

In addition, as a result of the agreement signed, the home appliances business will appear as a discontinued business in Philips' financial statements from the first quarter of this year.

 

Conclusion of an exclusive licensing agreement

The Dutch company Philips and Domestic Appliances will enter into an exclusive license agreement. The purpose of this agreement is to allow the use of the Philips brand and certain other brands of domestic appliances of the Dutch group. This use is for the manufacture, sale and marketing of Domestic Appliances products worldwide.

It is valid for a period of 15 years. However, it can be renewed in accordance with the terms of the trademark license agreement. Over this period, the annual payments correspond to an estimated net present value of almost EUR 0.7 billion. This equates to a total value of the agreement estimated at around EUR 4.4 billion.

 

About the Philips Home Appliances business

Founded in 1891 and headquartered in Amsterdam, Philips is a Dutch technology group. It is recognized as one of the world's leading home appliances, lighting and medical equipment companies. In the year 2020, the company recorded a turnover of 19.5 billion euros.

Furthermore, Philips is organized into several businesses, including the home appliances business. This business generated a turnover of EUR 2.2 billion last year. It is related to kitchen appliances, irons, coffee makers and various household appliances.

In addition, Philips' home appliances business is active both in the Netherlands and internationally. It is active in more than 100 countries and has about 7 000 employees worldwide.

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