Royal Philips NV, a global leader in health technology, announced on Thursday that it will sell its domestic-appliances unit to private equity firm Hillhouse Capital that is focused on helping companies achieve sustainable growth through digital enablement and innovation. This sale sees the formerly sprawling Dutch conglomerate complete its transformation to a focused health-care equipment maker.
The deal with Hillhouse, an Asia-focused investment firm, values the appliances business at about 3.7 billion euros ($4.4 billion), Philips said in a statement Thursday. Once the deal is completed, expectedly in the third quarter, the Amsterdam-based company expects to receive cash proceeds of about 3 billion euros.
After already withdrawing from the consumer-electronics businesses, which involved the sale of televisions, DVD players, and lighting, the sale of the appliances business arm marks Philips’ exit from non-health care-related markets. Frans van Houten, Chief Executive Officer of Philips, has made a string of acquisitions that are health-care-related to build out Philips’ telehealth and diagnostics portfolio and provide a one-stop-shop for hospitals and clinics looking to optimize costs.
“I am pleased that in Hillhouse Capital we have found a new home for the Domestic Appliances business to further expand on its market leadership, strong brand, and pipeline of new innovations,” said Van Houten, according to Yahoo. “This transaction concludes our major divestments. Going forward, our focus is on extending our leadership in health technology and continuing our transformation into a solutions company supporting professional healthcare customers achieve the Quadruple Aim and consumers with their personal health.”
Philips settled on Hillhouse’s offer because Van Houten believed that it will be the right home for the appliances business and factors including value, but also deal certainty, were considered for the decision, he said during a call with reporters. The divested business has agreed to pay approximately 700 million euros to keep using the Philips brand for 15 years.
The appliances business, which includes kitchen, coffee, garment care, home care appliances, and other products, generated 2.2 billion euros in sales last year.