Once a sprawling conglomerate, Amsterdam-based Philips has narrowed its focus in recent years, spinning off the lighting and consumer electronics divisions for which it was previously best known.
Philips said on Tuesday it would carve out the domestic appliances business, which produces coffee machines, vacuum cleaners and airfryers and generated 2.3 billion euros ($2.6 billion) in sales last year, in the coming 12 to 18 months.
“This business is not a strategic fit for our future as a health technology leader,” Chief Executive Officer Frans van Houten said.
He added that all options remained open for the division, which he said had a double-digit profit margin that was “slightly less” than the average for Philips.
ING analyst Marc Hesselink said a “quick and dirty” calculation valued the division at around 3 billion euros, assuming a 10% profit margin with a price tag of 12 times gross profit.
“This was a, in our view, widely expected move...to focus even more on health tech”, he said.
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