Philips, the electronics giant, has decided to float its lighting arm on the stock market in a historic initial public offering, aiming to spin off at least a quarter of the division’s shares.
According to a report in AFP: “The offering would consist of a sale of existing shares only held by Royal Philips, the current sole shareholder of Philips Lighting. The offering and listing, and their timing, are subject to, among other factors, market conditions,” the Amsterdam-based Philips said.
Philips in late 2014 announced it was selling off its core lighting business — a mainstay of its income for more than a century — to focus more on medical equipment. But since then Philips said it has been examining its options, hesitating between a straight sale and an IPO in the Amsterdam stock exchange.
Philips said it would retain the majority stake in the lighting arm with the aim to fully sell down over the next several years as it shifts its focus to healthcare products.
“Today’s announcement is a historic one for Philips as we aim to separate our company into two market-leading companies focused on capturing opportunities in the health technology and connected LED lighting solutions markets respectively,” Chief Executive, Philips, Frans van Houten said. “Philips Lighting is well-positioned as a stand-alone company,” he added.
After the announcement, shares in Philips fell by around 1.7 percent in mid-morning trade to around $27.20 per share on a sluggish Amsterdam stock exchange’s AEX index.
Philips sold its first light bulb a few years after it was founded in 1891, but for the past dozen years has increasingly shifted its focus on medical equipment, which now accounts for more than 40 percent of sales.
Philips said it was making the move into medical technology where margins are strong and less vulnerable to competition from emerging markets.
Its lighting business, which produces LED lights, halogen and fluorescent lamps and other electronic components, however remains a major money-spinner, selling products in around 180 countries.
Last year, Philips Lighting raked in 646 million euros in earnings before interest, tax, depreciation and amortisation, the company said.
It has manufacturing plants in more than 20 countries and holds a patent portfolio of over 14,000 patent rights.
A household name around the world for home appliances, Philips said in April it had earned $41.5 million in net income for the first quarter, compared with 100 million euros in the same period in 2015.