Goldman Sachs used derivatives to help Exor build $2.8 billion Philips stake, filings show

By Toby Sterling, Pablo Mayo Cerqueiro and Andres Gonzalez

AMSTERDAM (Reuters) – Investment company Exor (OTC:) was able to build a 15% stake in Dutch healthcare group Philips without triggering the usual disclosures thanks to derivatives deals through Goldman Sachs (NYSE:), regulatory filings show.

The two companies said earlier this week that Exor (AS:), the investment arm of Italy’s Agnelli family, had become the biggest shareholder in Philips by buying 15% of the company for about $2.8 billion.

Exor’s investment was seen as a vote of confidence in Philips (AS:) and boosted the Dutch company’s shares. But the transaction was carried out without triggering disclosures normally required under Dutch financial market rules if a company accumulates a stake of more than 3%, 5%, 10%, or 15% in a Dutch company.

When asked about this by reporters, Philips CEO Roy Jakobs said Exor had used a “construct with a financial institution” but gave no further details.

A US Securities and Exchange Commission filing published earlier this week showed that Exor had first purchased a stake of 2.99% in Philips by June 30 — just under the reporting threshold.

Filings by the Dutch Financial Market Authority AFM dated Aug. 14 but published late on Wednesday showed Goldman Sachs had taken an 12.11% stake in Philips using a derivatives structure that included 95 million call options.

Sources confirmed to Reuters earlier this week that Goldman Sachs acted on behalf of Exor but could not give more details.

Exor and Goldman Sachs declined to comment.

Law firm Allen & Overy acted as Exor’s legal adviser on the deal, the sources said. Law firm De Brauw confirmed it advised Philips. An Allen & Overy spokesperson did not immediately respond to a request for comment.

An AFM spokesperson confirmed, without reference to the Exor deal, that there is no legal obstacle to an investor jumping various thresholds in terms of accumulating a shareholding in a single day.

Philips welcomed Exor’s investment and the companies signed an agreement over the weekend that Exor would commit to not raising its stake further than 20%, eliminating the possibility of a full takeover attempt.