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Philips Plans IPO of Lighting Unit

Dutch electronics group Philips is planning a multi-billion-Euro initial public offering for its lighting business in the first six months of 2016,starting with a sale of a minority stake in the company, The Wall Street Journal reports. Philips published its shareholders circular, offering further specifications and explanation of the proposed separation from Royal Philips. 

The circular announced it would only sell a minority interest in the business at initial stages, “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 expects shareholders to consider the spinoff at the company’s annual meeting in May. It has not been stated how much Philips is expecting to receive from the IPO.

The move will position the parent company narrow its focus, following profit warnings and criticism of its cumbersome corporate structure, 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-based company wrote in the circular.

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

“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 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. By the end of the process Philips expects to be fully divested from lighting. The board continues to evaluate other options as well, the letter said, and expected to complete a sale of those businesses in the first half of this year.

The lighting business will include three divisions that cover offerings like traditional light bulbs and complete lighting systems; it 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.

The lighting unit employs roughly 37,000 people and posted sales of 1.98 billion euros, (about $2.1 billion) in the fourth quarter, according to The New York Times.

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