/Philips in danger due to very low value of its shares
Philips in danger due to very low value of its shares

Philips in danger due to very low value of its shares

CEOs have one phrase in common: the best way to protect a company against compulsive purchase attempts is a high share price.

However, this is not happening in Philips.

The company’s share price is under strong pressure due to the so-called case of hospital supplies and “sleep apnea”.

The CEO Frans van Houten recently fell silent when asked if the sharp drop in Philips’ share price makes his company vulnerable.

It was as if he had to hold back not to say what thinking about a conversation with a group of journalists: the fall, although disproportionate, is worrying.

After about five seconds of silence, Van Houten gave the expected answer: “We need to focus on solving this problem As soon as we can. I think we’ll get out of this. ” And he added, “of course, there can be vulnerability if the share price is low.”

Philips shares fell almost 40%

The point is, Philips’ share price has fallen dramatically since the company announced in April 2021 that the sound-absorbing foam in its sleep apnea devices is not enough and can even cause cancer.

In addition, it confirmed that there were millions of patients who have been affected.

Investors fear claims for damages worth billions of dollars, so the price has fallen from a high of € 50.90 at the beginning of April to € 30.50 at the beginning of December this year, a disaster.

Compared to the rise in the AEX index, the loss is still

Philips share price appeared to recover briefly in October, but ended in free fall after the second weekend in November.

That is related to This was followed by the release of a report from the US medical regulator, the FDA, on Friday, November 9. There, there was talk of “failure” of Philips.

Rescue funds

A public offer to acquire a relevant rival, such as the one that occurred from Akzo Nobel in 2017, it seems unlikely.

However, there are other candidates. Philips’ two main competitors are Siemens Healthineers and General Electric, but both companies already have significant market share in hospital equipment. This would cause a public takeover bid for Philips to encounter objections from the competition authorities.

Likewise, this does not mean that the danger for Philips has passed. There are enough very capital-rich buyback funds that can make an attractive offer to many shareholders.

Is it time to think about Philips’ actions?

There is uncertainty regarding the claims for damages of those affected by the apnea case and this could deter to potential buyers. Beyond this, opinions are divided.

Some think that Philips does not rank high on the list of companies at risk worth buying. Others think that there is nothing to get from Philips these days.

The truth is that Philips has lost more than 15 billion euros in market value. As a result, there would be sufficient margin to calculate, in addition to a takeover bid, one billion euros in compensation.

Philips shares. Investing.

What a buyback fund would do is buy compulsively and then try to sell Philips in parts , with the expectation that the parts are worth more than the whole.

In that case, eyes will focus first on the Personal Health division, which includes electric toothbrushes and razors.

It is a division less suited to Philips, now that the company has focused on high-quality healthcare technology for the last ten years.

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