M&A

Philips Plans to IPO Lighting Unit

The proceeds of the spin-off will be used to “increase growth and drive profitability through ... disciplined capital allocation," the Dutch compan...
Katie Kuehner-HebertMarch 19, 2015
Philips Plans to IPO Lighting Unit

At its upcoming annual shareholder meeting, Royal Philips plans to ask for approval to spin off its lighting business with an initial public offering next year. The Dutch company wants to focus on its growing health technology business lines.

“By establishing a stand-alone lighting solutions company, the lighting business and management team will be better positioned to capture growth opportunities, be closer to customers, adapt more quickly to evolving customer needs, and enable decisive investments in the future of lighting,” the Amsterdam-baed company wrote in a shareholder circular published Thursday.

Royal Philips wants to keep its “strongly positioned” health technology lines in ultrasound diagnostics, cardiac care, home healthcare, and personal hygiene, among others.

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“A united health tech portfolio, enabled by a cloud-based digital health platform and big-data analytics capabilities, will be uniquely positioned to capture the key opportunities in population health management, improved solutions for health systems and accountable care organizations, and coordinated care delivery across the health continuum,” the company said.

Royal Philips would like to separate the lighting business in stages, the company said, by initially offering only a minority interest in the IPO that would likely take place in the first half of 2016. That would be followed by one or more secondary offerings, or by one or more other transactions, with the aim of full divestment of the lighting solutions company over time.

Royal Philips intends intend to use the proceeds of the spin-off to “increase growth and drive profitability through a disciplined capital allocation policy.”

The spinoff would not include the company’s automotive lighting and LED components business lines, which are currently being combined into a stand-alone company within the Royal Philips group.

“Royal Philips is actively discussing the sale of this business with potential buyers and expects a transaction to be completed in the first half of 2015,” the company wrote.

The lighting business had roughly 37,000 employees and posted sales of 1.98 billion euros, or about $2.1 billion, in the fourth quarter, according to The New York Times.