Royal Philips NV has shortlisted a clutch of Asian suitors in the bidding for its home appliance unit, which could fetch at least 3 billion euros ($3.7 billion), people with knowledge of the matter said.
Philips invited Chinese buyout firm CDH Investments and domestic appliance maker TCL Technology Group Corp. to lodge second-round offers, according to the people. Asian investment firm Hillhouse Capital has also progressed as well as at least one other party, the people said, asking not to be identified as the information is private.
The business had initially attracted interest from several large U.S. and European private equity firms including PAI Partners, Apollo Global Management Inc., Advent International and CVC Capital Partners, Bloomberg News previously reported. However, several of the funds balked at the asking price of at least 3 billion euros, the people said this week.
TCL Technology has teamed up with China’s Citic Capital, the people said. Some other bidders could also pursue joint offers, according to one of the people. Philips has separately been considering an initial public offering of the business, the people said.
Hillhouse, started by Yale University endowment alumnus Zhang Lei, is already an investor in Chinese air conditioner maker Gree Electric Appliances Inc. Deliberations are ongoing, and the suitors could decide against making binding offers, the people said.
Representatives for CDH Investments, Citic Capital, Hillhouse and Philips declined to comment, while a spokesperson for TCL Technology didn’t immediately respond to requests for comment.
Philips said last year that it plans to sell the home appliance unit, which produces everything from coffee makers to air purifiers. The potential disposal forms part of Chief Executive Officer Frans van Houten’s efforts to revamp Philips into a focused manufacturer of health-care equipment.
The Philips CEO said in October the process of separating the business is “on track” and expected to be completed in the third quarter of 2021. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are working on the disposal, Bloomberg News has reported.
Shares in TCL Technology fell as much as 1.9% in Shenzhen on Wednesday, while Philips dropped 2% in Amsterdam on Tuesday
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