Royal Philips, the world leader in healthcare technology, and Exor – the Dutch financial holding company controlled by the Agnelli family – announced that they have reached an agreement whereby Exor will acquire a 15% stake in Philips. The news is sent in a joint note from the two companies. In Amsterdam, Philips is up +4%, Exor is down -0.5%.
Philips: Diagnostics and Ultrasound
Exor’s investments in current values are €2.6 billion. In the first six months of the year, the Dutch group recorded revenues of 8.636 billion (8.095 a year ago) with an adjusted operating margin of 812 million (from 459 million), which equals more than 9% of sales. The group — which has a business focused on diagnostics and ultrasound, “connected care” and personal care consumer products — expects revenue growth of 5% (£17.8 billion in 2022) with close to double-digit gross margin.. At the same time, Exor, which intends to support the group’s development strategies, has signed an agreement with the company to be a minority investor in the long term and proposes its own representative on the board of directors.
Exor: There is still 2 billion to invest
With its entry into Philips, Exor has brought its first investment in the healthcare sector to nearly €4 billion, following transactions on Institut Mérieux and Lifenet, confirming its interest in groups undergoing a transformation of its core business. Based on estimates for cash generation through 2024 that management prepared last fall, Exor retains investment capacity, without resorting to debt, of more than 2 billion after the Philips deal. According to Equita Sim, the investment in the Dutch group should account for 8% of Exor’s net asset value and the net equity position should move from 1.3 billion in cash to nearly 1.3 billion in debt. According to Intermonti, there should be a net debt of 1.68 billion. The discount on the Nav in which Exor stock is currently trading is close to 44%&, according to SIM itself.
Long term minority investor
Exor’s investment in Philips, which fully supports the company’s senior management and its strategy as well as its ability to create value, requires Exor to appoint a member to the Philips Supervisory Board. The agreement between the parties provides for Exor’s commitment to be a minority investor in the long term, with the right to propose a member of the Supervisory Board, in addition to many of the usual conditions. Although Exor does not intend to purchase additional Philips shares in the near term, the agreement provides that over time – at its discretion – it increases its stake to a maximum of 20% of the ordinary share capital due to Philips.
Philips management ratings
Exor’s investment in Philips will not have any dilutive effect and has been achieved through the purchase of shares in the market, as well as through an agreement with an important financial institution. Roy Jacobs, CEO of Royal Philips, said: “Exor’s investment, long-term perspective and increased focus on health and technology fit well with our strategy and significant value creation potential. With our market leadership positions and people-centred innovation capabilities, Philips is well positioned to To achieve our mission of improving people’s health and well-being, while creating value for all stakeholders.” For her part, Feike Sijbesma, Chairman of the Supervisory Board of Royal Philips, added: “We welcome Exor as a long-term investor in Philips. It has a proven track record of success and a clear strategy for growth and development in the health and technology sectors. Exor’s significant investment underscores its confidence in Philips’ transformation into a healthcare technology company, as well as its ability to grow and value.”
Exor Summit Suspension
John Elkann, CEO of Exor, emphasized, “The path of change that Philips has pursued in recent years has resulted in the creation of a company that combines health and technology, two sectors in which we are involved. Our discussions confirmed the strong and positive alignment between our long-term approach to supporting the development of our companies and the ambitious plans of Philips under Chaired by Feike Sijbesma and executive team led by Roy Jakobs”.
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