Philips has been under pressure for some time – mainly because of faulty medical devices. Thousands of jobs are expected to be lost in the coming years. Now the Italian Agnelli dynasty is stepping in.
The medical technology group Philips has secured the entry of a major investor in a difficult phase. The financial holding Exor of the Italian Agnelli family has bought 15 percent of the shares in the Dutch market, as the company announced on Monday in Amsterdam. According to a Philips spokesman, the deal is worth around 2.6 billion euros. Philips’ entry could provide some stability given the uncertainty surrounding expensive product recalls in the United States. Exor is currently expanding its investments in healthcare, technology and luxury companies. The Philips share rose significantly in Amsterdam.
After the start of trading, the paper gained 5.6 percent to EUR 19.53. In the current year, the course has expanded its gains to almost 40 percent. However, since the high in 2021, the value of Philips had continuously slipped from over 50 euros to a low of just over 12 euros. Shares in Philips rival Siemens Healthineers were up 0.7 percent in the Dax at the beginning of the week.
With the investment, Exor supports Philips’ business strategy, it said. Exor currently has no plans to increase further in the short term, but can increase its stake to a maximum of 20 percent under the agreement concluded. The holding also gets a seat on the supervisory board.
10,000 job cuts by 2025
Exor CEO and Agnelli family heir John Elkann said Philips’ focus on healthcare as well as technology is consistent with Exor’s commitment. Exor has stakes in corporations such as Stellantis, Ferrari and Iveco, as well as the Juventus football club and the British business magazine The Economist. The Agnelli family controls the holding through their 53 percent stake. The Italian entrepreneurial dynasty was one of the founders of the car manufacturer Fiat.
The costly recall of ventilators and devices for sleep therapy is currently weighing on the Philips group. According to Philips from July, around 99 percent of the replacement devices and spare parts had recently been produced and most of them had already been delivered to customers and patients.
In the affected ventilators, an insulating foam was processed, from which particles were detached. The foam used is suspected of becoming toxic over time. The company has budgeted around €1 billion to recall around 5.5 million devices worldwide and set aside an additional €575 million as part of a planned US patient compensation settlement. However, class action lawsuits are still pending against the company in the United States.
Company boss Roy Jakobs took over the management of the company last October and launched a savings program in which 10,000 jobs are to be cut by 2025. In day-to-day business, after a few meager quarters, things were going better again. After the second quarter, Philips raised its full-year targets for sales and operating profit in July.
Source: Stern
