Philips said on the 25th that it will sell its home appliance business to Hillhouse Capital at a price of 3.7 billion euros. Philips said last year that it plans to sell the home appliance division that produces coffee machines and vacuum cleaners because it no longer fits its core business.
Philips said that the transaction will be completed in the third quarter, awaiting regulatory approval. In addition, the two parties also signed a 15-year licensing agreement for the Philips brand, which also means that the total transaction amount has reached 4.4 billion euros. Philips planned to sell the home appliance division last year, and this business has sales of 2.2 billion euros in 2020. Prior to this, many buyers have expressed interest in acquisitions, including a series of companies such as Hillhouse, CDH Investments, and home appliance manufacturer TCL.
As for the reason for the sale, Philips CEO Fransvan Houten said earlier that Philips hopes to focus on the medical technology business in the future. The home appliance business and the group's strategy no longer match, so it is considering selling its home appliance division.
Philips CEO FransvanHouten stated in a statement that this transaction means that we have withdrawn from the home appliance business. Looking to the future, our focus is to expand our leadership in health technology.
For acquirers, although Philips' home appliance business is generally competitive, with the help of Philips' global market layout, it can bring greater market space. Therefore, many buyers have rushed to seek acquisitions.
It is worth noting that Hillhouse, the final buyer, was already an investor in Gree, a leading home appliance company, and to some extent has already stepped into the home appliance business. The acquisition of Philips' home appliance business is also reasonable.
As for why it is necessary to sell this part of the core business as a whole, Philips Global CEO Fransvan Houten said: "I am very pleased that Philips has reached a cooperation with Hillhouse to further expand the market leadership position of the home appliance business, build a strong brand, and expand innovation. After the completion of the transaction, Philips’ future focus is to expand our leadership in health technology and further transform into a health service company to provide customers with professional health care services."
Public information shows that Philips Home Appliances is headquartered in the Netherlands and occupies a global leading position in the fields of kitchen, coffee, clothing care and home care appliances; it has more than 7,000 employees worldwide and carries out innovation, manufacturing and business activities in more than 100 countries. Products include fully automatic espresso machines, air purifiers, vacuum cleaners and more. Its 2020 related business sales amounted to 2.2 billion euros.
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