Italian billionaires behind Ferrari, Juventus drop $2.8B to become Philips' largest single shareholder

Though rebuked by shareholders in a vote earlier this year that kept its executives potentially liable for any legal issues related to its recent recall-related troubles, Philips has gotten a major boost of confidence from a new investor.

Exor, the holding company controlled by Italy’s dynastic Agnelli family, has taken on a 15% stake in the devicemaker, the duo announced Monday. That represents about 2.6 billion euros of Philips’ total 17 billion euro market cap, equal to about $2.8 billion.

That makes Exor Philips’ largest single shareholder, Reuters reported; the next-largest investors have holdings of less than 10% each in the company. And Exor’s position could grow even further: The newly signed relationship agreement (PDF) gives it the opportunity to expand its control to 20%.

Exor’s investment isn’t expected to dilute Philips’ shares, since it was completed through “on-market share purchases and an agreement with a major financial institution,” per the announcement.

The pair noted that Exor chose to carve out a holding in Philips’ business as part of an effort to expand its presence in the realms of healthcare and technology. Many of the Agnelli family’s other investments are focused on the luxury sector, with holdings in the shoe designer Christian Louboutin and auto brand Ferrari—the latter of which is a controlling stake—as well as in the Turin-based Juventus Football Club and in The Economist.

In the agreement with Philips, Exor signed on as a long-term minority investor in the medtech giant. Its investment also gives Exor the right to suggest one potential new member of Philips’ supervisory board, and Philips will “use its reasonable efforts” to influence that individual’s formal nomination to the board at the next general shareholders meeting.

“The path of change taken by Philips in recent years has created a company that combines two areas—healthcare and technology—to which we are committed,” Exor CEO John Elkann said in the announcement. “Our discussions have confirmed the strong and positive alignment between our long-term, supportive approach to our companies and Philips’ ambitious plans under the chairmanship of Feike Sijbesma and the executive team led by Roy Jakobs.”

The optimistic investment comes in the wake of major losses for Philips, which has spent more than two years scrambling to rectify the effects of the recall of around 5.5 million of its CPAP machines, ventilators and other respiratory support devices. Amid that turmoil, Philips’ valuation plummeted around 60%.

Monday’s announcement put Philips’ shares back on the upswing. They opened Monday morning at $20.77, about 2.5% higher than Friday’s closing price, then continued inching upward, looking to be on track to cross the $21 threshold for the first time in almost a month.

In all, things are looking cautiously optimistic for Philips, which also reported last month its first quarterly net profit since the fourth quarter of 2021. The company’s second-quarter earnings report boasted profits of 74 million euros, even despite expenses of nearly 175 million euros related to the recall and the beleaguered Respironics division as a whole.

“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,” Philips CEO Jakobs said in the announcement. “With our market leadership positions and people-centric innovation capabilities, Philips is well positioned to deliver on our purpose to improve the health and well-being of people, creating value for all stakeholders.”