By Bart H. Meijer
AMSTERDAM (Reuters) -Philips shares surged 33% at the start of trading on Monday, as the Dutch medical devices maker announced a sweeping settlement for claims over its recalled breathing devices in the U.S.
Philips said it had agreed to pay $1.1 billion to settle all personal injury claims filed in the U.S., to end the uncertainty that had slashed its market value in the past three years.
“This settlement is significantly lower than expectations of $2-4 billion and worst case of $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 been grappling 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.
Shares on Monday jumped to their highest level since May 2022, but were 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.
CEO Roy Jakobs declined to say whether the bill was smaller than he had feared.
“$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 faulty devices, but Jakobs said this settlement would end most of the uncertainty for investors.
“Totaling the total U.S. cases that we have now finalised, so economic loss, medical monitoring and personal injury, then the vast majority of claims is actually put to bed.”
The company said it did not admit any fault or liability, or that any injuries were caused by its devices.
(Reporting by Bart Meijer; Editing by Clarence Fernandez, Subhranshu Sahu and Louise Heavens)
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