Philips NV Sells Shares in Lighting Division at Lower End of Target Range -- Update
May 26 2016 - 5:16PM
Dow Jones News
By Maarten van Tartwijk
AMSTERDAM -- Royal Philips NV said it sold shares in its
125-year-old lighting division at the lower end of the targeted
range, valuing the business at EUR3 billion ($3.36 billion).
The Dutch technology group sold a 25% stake in Philips Lighting
for EUR20 a share, according to a statement released Thursday. The
pricing was slightly below the midpoint of a range of EUR18.50 to
EUR22.50 announced last week.
Shares in Philips Lighting will start trading on Euronext
Amsterdam on Friday. The offering is one of the largest listings in
Europe so far this year.
The sale, which was first announced in September 2014, is the
final step in a years-long restructuring spearheaded by Chief
Executive Frans van Houten. It will mark the end of Philips as a
sprawling conglomerate that produced everything from lightbulbs and
television sets to medical scanners and coffee machines.
Philips started making its first incandescent light bulbs in
1891 in the southern Dutch city of Eindhoven. It grew to become one
of Europe's biggest technology giants, credited with innovations
like the compact disc and the electric shaver.
Over the past decade, the company embarked on a dramatic
strategic overhaul as it was dogged by profit warnings and
criticism that its diversified corporate structure was slowing it
down. Mr. van Houten, a company veteran who took the helm in 2011,
has said restructuring Philips is similar to running a
marathon.
The Amsterdam-based company now seeks to concentrate on selling
health-care technology and services in a market where it competes
with General Electric Co. and Siemens AG. It believes the
health-care business is more profitable and offers better long-term
growth opportunities.
Philips has a good record when it comes to spinning off assets.
ASML Holding NV and NXP Semiconductors NV, two former Philips
subsidiaries, have fared well after being spun off in the 1990s and
2000s. Both semiconductor companies now have a bigger market value
than their former parent.
The future of Philips Lighting, the world's biggest lighting
company with EUR7.5 billion in revenue last year, may be less
bright. The business still makes most of its profit from producing
conventional lamps, a market that is in structural decline, while
its fast-growing LED business is facing cutthroat competition.
To become less reliant on manufacturing, Philips management has
been seeking to shift the focus of the business to services, such
as supplying lighting systems for cities, sporting venues and
theaters.
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
(END) Dow Jones Newswires
May 26, 2016 17:01 ET (21:01 GMT)
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