Phillips prepares IPO for lighting division

25 Apr 2016

Royal Phillips NV is preparing an initial public offering (IPO) for its lighting division after British investment firm Melrose Industries Plc dropped out of the running to buy the unit that could have fetched around €5 billion ($5.7 billion).

Media reports had earlier said that private equity firms Blackstone Group and Onex Corp, a group led by Apollo Global Management and Chinese investor GO Scale Capital were in the race to buy the business.

Philips today said that it is more likely to sell its lighting business through an IPO rather than a private sale, despite continuing with the process of an auction.

''With equity markets' sentiment improving compared with the first couple of months of the year, an IPO increasingly appears a more likely outcome,'' Philips said in a statement.

''However, the company has not yet concluded on all proposals in the private sale process and continues to assess the attractiveness of this route compared to the IPO, both in terms of value and conditions, while taking into account the best interests of Philips and its stakeholders. As such, Philips expects to update the market on conclusions and next steps shortly,'' the statement added.

In 2014, the Amsterdam-based company had announced that it plans to split the company into two, separating its healthcare-lifestyle and lighting businesses after it stripped off less profitable activities. (See: Philips to split company in two)

Its lighting business, which has annual sales of €7 billion, employs 47,900 people worldwide.

Philips Lighting spans the entire lighting value chain – from light sources, luminaires, electronics and controls to full applications and solutions – through Light Sources & Electronics, and Professional Lighting Solutions.

Philips has been a household name for around a century but in recent years it had stripped down its business to focus on lighting and on medical technologies where margins were strong and competition from emerging markets limited.

The company last year announced the sale of its lifestyle entertainment segment, which makes stereos and DVD players, after it sold its troubled TV-making arm in 2012, but it scrapped its planned $3.3-billion sale of its Lumileds business to Asian private equity firm Go Scale Capital after the US Committee on Foreign Investment blocked the sale on national-security grounds.