Daily Newsletter

14 August 2023

Daily Newsletter

14 August 2023

Exor snaps up 15% stake in Philips for around $2.8bn

Italy’s billionaire Agnelli family has added the healthcare giant to its portfolio that includes Ferrari and Juventus Football Club.

Robert Barrie August 14 2023

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.

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.”

Digital transformation of the healthcare industry is driving the demand and development for precision and personalized medicine

Per GlobalData estimates, the precision and personalized medicine market is expected to achieve a CAGR of more than 43% between 2022 and 2029. The digital transformation of the healthcare industry is driving the market demand. For example, advances in biomarker testing with NGS are improving patient selection, use of AI in identifying trends in big datasets is accelerating the time from drug discovery to commercialization, and the use of Industry 4.0 technologies is improving the quality and efficiency of manufacturing complex drugs such as cell and gene therapies.

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