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Dutch group Philips has agreed to settle litigation linked to its sleep apnoea machines for $1.1bn, ending a long-running legal battle and sending its shares up as much as 37 per cent on Monday.
The Amsterdam-listed group said it had reached a deal with plaintiffs in the US to end “uncertainty” from the litigation, without admitting liability in personal injury claims and a medical monitoring class action suit.
The spectre of legal action and the hit to sales caused by the faulty devices had contributed to a roughly 60 per cent fall in its share price since a peak in early 2021. Analysts had estimated the cost of any settlement to be between $2bn and $4bn.
Julien Dormois, an analyst at Jefferies, said the settlement was “much milder than feared and shall mark the end of litigation uncertainty”.
Shares in Philips, which over the past decade has transformed itself from a consumer electronics conglomerate to a medical technology business, surged as much as 37 per cent to €27.05 in early trading.
Having reached a settlement, chief executive Roy Jakobs said on Monday: “Remediation of the sleep therapy devices for patients is almost complete, and the test results to date show the use of these devices is not expected to result in appreciable harm to health. We do regret the concern that patients may have experienced.”
Philips still faces an ongoing investigation into the devices by the US justice department. The issue affected 15mn sleep apnoea devices globally. Philips has since cut thousands of jobs and targeted a recall of 5.6mn devices.
In January, Philips agreed to stop selling sleep apnoea machines in the US after reaching an agreement with the federal government over how to fix long-running problems with its breathing machines.