By Ian Walker in London and Archie van Riemsdijk in Amsterdam
Dutch electronics group Koninklijke Philips NV on Thursday said
it plans to spin off its lighting business in a multibillion-euro
initial public offering next year.
The announcement comes after the company said in September that
it would split itself into two companies and spin off its lighting
business. The separation is the latest move by the Dutch
conglomerate to narrow its focus after a number of profit warnings
and criticism that its cumbersome corporate structure is slowing it
down.
Philips, whose products range from shavers and coffee machines
to hospital scanners, said Thursday that the lighting business,
which reported revenue of EUR6.87 billion ($7.28 billion) in 2014,
would be moved into a separate holding company structure to prepare
it for a listing.
The plan echoes the decision by Siemens, the German engineering
group, which in 2013 listed Osram Licht AG, its lighting business,
having previously separated it from the main group. Philips
Lighting and Osram compete with the lighting division of General
Electric Co.
In a letter to shareholders, Philips said the spinoff could take
place in the first six months of 2016, starting with the sale of a
minority stake. This was slightly longer than expected,
highlighting the complexities of the separation, said Kepler
Cheuvreux analyst Peter Olofsen.
"In many countries, Philips' health care and lighting activities
have operated in one legal entity for a hundred years or more," Mr.
Olofsen said.
Philips Chief Executive Frans van Houten has experience with
similar overhauls. In 2009, he was hired by Dutch bank ING Groep NV
to lead the split of its banking and insurance operations, one of
the largest corporate restructurings in Dutch history.
Philips said the split would enable both companies to better
focus on their own operations, leaving Philips reliant on
health-care equipment and consumer-lifestyle products for revenue.
Lighting contributed nearly 30% of Philips revenue of EUR21.39
billion in 2014.
The proceeds of the spinoff will be used invest in the health
care operations, Philips said. The company didn't say how much it
hoped to raise.
The separation of the lighting business won't include the
company's automotive lighting and lumileds--LED
components--operations, which will be sold separately. Philips said
it was actively discussing the sale of the businesses with
potential buyers and that it expects a deal to be completed in the
first half of 2015.
Shareholders will vote on the proposed separation at an annual
general meeting to be held on May 7.
Write to Ian Walker at ian.walker@wsj.com and Archie van
Riemsdijk at archie.vanriemsdijk@wsj.com
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