Royal Philips NV will sell its domestic-appliances unit to private equity firm Hillhouse Capital as the formerly sprawling Dutch conglomerate completes its transformation to a focused health-care equipment maker.
The deal with Hillhouse values the appliances business at about 3.7 billion euros ($4.4 billion), Philips said in a statement Thursday. The Amsterdam-based company expects to receive cash proceeds of about 3 billion euros once the deal is completed, which is expected in the third quarter.
After already exiting consumer-electronics businesses including televisions, DVD players and lighting, the sale of the appliances unit marks Philips’ exit from non-health care-related markets. CEO Frans van Houten has made a string of health-related acquisitions to build out Philips’ telehealth and diagnostics portfolio and provide a one-stop shop for hospitals and clinics looking to optimize costs.
“This transaction concludes our major divestments,” Van Houten said. “Going forward, our focus is on extending our leadership in health technology.”
Philips settled on Hillhouse’s offer because it’s convinced the Asia-focused investor will be the right home for the appliances business, Van Houten said during a call with reporters. The divested business has agreed to pay about 700 million euros to keep using the Philips brand for 15 years.
Factors including value, but also deal certainty, were considered for the decision, the CEO said.
The appliances business, which includes coffee makers, air purifiers and other products, generated 2.2 billion euros in sales last year.