Philips Plans Lighting Business IPO Next Year - Update

(RTTNews) - Dutch consumer electronics company Koninklijke Philips NV (PHGFF.PK, PHG) on Thursday said it plans to separate its lighting business through an initial pubic offering in the first half of 2016 as part of efforts to drive growth and enhance shareholder value.

In a statement, the Amsterdam-based company said it would probably offer only a minority interest in the lighting business IPO, followed by one or more secondary offerings or by other transactions, with a full divestment over the course of time.

The spinoff proposal is to be voted on at the annual general meeting of shareholders on May 7.

At the same time, Philips said it would continue to review alternatives including private sale, in light of general market conditions and developments in the lighting business.

The announcement was on expected lines, since the electronics giant in September has indicated it plans to split itself into two companies focused on Lighting Solutions and HealthTech markets.

According to the company, both lighting and healthcare businesses offer attractive end-markets, and each has unique customer needs, value drivers and competitive dynamics.

The spinoff is part of efforts by Philips to capitalize on market changes and new growth opportunities in lighting as well as healthcare and consumer lifestyle businesses.

The lighting business, which includes traditional light bulbs and complete lighting systems, had sales of about 1.98 billion euros in the fourth quarter. The business had about 37,000 employees on its rolls.

Philips said the spinoff is not expected to include the automotive lighting and LED components businesses, which it expects to combine into a stand-alone company. Philips said it was in talks with potential buyers and expects to complete a sale of those businesses in the first half of 2015.

Philips said it would actively monitor its interest in the lighting business for as long as it maintains an ownership stake in it.

The company expects to use the proceeds of the spinoff to deliver on its HealthTech strategy and to increase growth and drive profitability. It also plans organic investments and strategic acquisitions, among others.

Philips has been striving to pursue growth, and has cut costs and divested its television and audio, video, multimedia and accessories businesses. It had also made strategic acquisitions to strengthen its lighting business.