Philips’ association with lightbulbs and televisions is becoming a distant memory as investment company Exor acquires a 15% stake in the Dutch conglomerate, with aligned views of increasing market dominance in the health technology sector.
EXOR is controlled by Italy’s billionaire Agnelli family and has a diverse portfolio that includes a 24.4% stake in Ferrari, majority ownership of Juventus Football Club, and a 43.4% stake in The Economist.
In a newsletter to investors reflecting on 2022, Exor’s chief executive John Elkann spoke of the company’s ambition to infiltrate the healthcare sector, saying “reflecting on 2022, I can confidently share with you that our work on healthcare has reinforced our view that there are real opportunities for us in this sector and our interest has only grown”.
Exor acquired the stake in a transaction worth approximately $2.8bn “by way of on-market share purchases”, with the companies adding that there would be no resulting share dilution.
With Agnelli’s holding company now on board as a “long-term minority investor”, Philips will continue through the second half of 2023 expecting its share price to grow. The financial attractiveness of the company has been severely affected by multiple US Food and Drug Administration (FDA) recalls of its respiratory devices. Philips’ share prices are down around 60% from an April 2021 high and have set aside $634m in litigation provisions to cover the costs of several lawsuits filed against the company.
Philips was buoyed by better-than-expected Q2 2023 results and raised its 2023 sales prospects as a result. In a joint-company statement announcing the 15% stake transaction, Elkann said that Exor is committed to Philips’ two areas of focus, notably healthcare and technology.
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Philips’ CEO Roy Jakobs said: “Exor’s investment in Philips, their long-term outlook and increased focus on healthcare and technology fit well with our strategy and substantial value creation potential.”