AMSTERDAM (April 29): Philips shares surged 35% early on Monday, as the medical devices maker announced a smaller-than-expected settlement to resolve claims over recalled breathing devices in the United States.
Philips said it had agreed to pay US$1.1 billion to settle all personal injury claims filed in the US, ending uncertainty that had slashed its market value over the past three years.
“This settlement is significantly lower than expectations of US$2 billion-US$4 billion and worst case of US$10 billion,” Barclays analysts said.
“It comes a lot earlier than anticipated and removes an overhang many have worried would linger for years.”
Amsterdam-based Philips has grappled with the fallout of its recall of millions of breathing devices and ventilators for three years, as fears of large litigation bills lopped off about two-thirds of its market value.
Its shares were up 35% at 26.60 euros at 0810 GMT, hitting their highest level since April 2022, though still only worth half as much as before the recall started in June 2021.
The devices were recalled because of concerns that foam used in them could degrade and become toxic, carrying potential cancer risks.
Chief executive officer Roy Jakobs declined to say whether the bill was smaller than he had feared.
“US$1.1 billion is a significant amount, however you put it. This is important to end uncertainty and to provide clarity on our way forward,” he told reporters.
Philips is still facing lawsuits in Europe over the devices, but Jakobs said this settlement would end most of the uncertainty for investors.
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