Royal Philips NV has reached out to the Chinese counterparts to gauge their interest in acquiring its home appliance unit, which could fetch as much as $4 billion, people with knowledge of the matter said. The Amsterdam-based company has approached fellow white goods manufacturers Haier Group Corp. and Midea Group Co. ahead of a formal sale process expected to start in the fourth quarter, the people said, asking not to be identified as the information is private.
Philips is also contacting Turkish household appliance makers Arcelik AS and Vestel as well to test their appetite for a deal, one of the people said. Buyout firms Blackstone Group Inc., CVC Capital Partners, and KKR & Co. are also expected to study the business when the sale kicks off, according to the people.
When Philips was selling its Lumileds lighting components division about five years ago, the business attracted interest from private equity firms including Apollo Global Management LLC, Bain Capital, CVC, KKR and Onex Corp., people familiar with the matter said at the time.
Representatives for Blackstone, CVC, Haier, KKR, Philips, and Vestel declined to comment. A spokesperson for Midea wasn’t immediately available for comment. A representative for Arcelik said the matter isn’t on the company’s agenda for the moment, without elaborating.
Philips said in January it plans to sell its home appliances unit, which produces everything from coffee makers to air purifiers and generates revenue of 2.3 billion euros ($2.6 billion). The potential disposal forms part of Chief Executive Officer Frans van Houten’s efforts to revamp Philips into a focused health-care equipment maker.
The CEO said on an earnings call Monday that he expects a sale to be completed in the third quarter of 2021. “This is fundamentally a solid business with market-leading positions and we expect to engage with interested parties after the summer,” Van Houten said. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are working on the disposal of the appliance unit, Bloomberg News has reported.
Additionally, South Korean tech giants, Samsung and LG are possible candidates that could acquire Royal Philips‘ domestic appliance unit. This might have either of the two companies soon offering small home products in the near future.
Philips’ domestic appliance business has factories in a few countries including Austria, Brazil, and China. It also owns R&D centers in India, Hong Kong, Singapore, and Italy, all the while employing roughly 4,700 workers worldwide.
Samsung is already selling large kitchen appliances – including refrigerators and ovens – but it has no market share in the small domestic appliance segment. Acquiring Philips’s arm would open up new opportunities for expansion, but it’s unclear whether the Philips brand would remain intact as a Samsung subsidiary or if the Korean tech giant would start selling small appliances under its own brand.