Philips More Likely to Sell Lighting Unit Via IPO Than Private Sale -- Update
25 Abril 2016 - 6:27AM
Dow Jones News
By Maarten van Tartwijk
AMSTERDAM--Royal Philips NV said Monday it is more likely to
sell its lighting business via an initial public offering rather
than a private sale, sending its shares plummeting.
The Dutch electronics group said it tilts toward an IPO even as
it continues to assess proposals in a private sale process.
"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. A decision could be announced
"shortly", it said.
Shares in Philips fell more than 4% in Amsterdam as investors
appeared to react badly to the news of a possible listing. Liberum
analyst Daniel Cunliffe said the announcement dashed hopes of a
sale even as shareholders have known for more than a year that a
listing was possible.
Philips has said an IPO could take place before the end of June,
a timing that coincides with the U.K's June 23 referendum on its
membership of the European Union. A "no" vote is expected to send
ripples across financial markets, creating uncertainty for new
stock market listings.
The business has drawn interest from some investment groups,
including Blackstone Group LP and Onex Corp., and could be worth up
to EUR5 billion ($5.6 billion), The Wall Street Journal reported in
March.
Philips Chief Executive Frans van Houten said a disposal remains
an option, noting Philips has "not yet concluded on all proposals
in the private sale process and continues to assess the
attractiveness of this route." The proposals will be judged on
their value, contractual conditions as well as potential regulatory
hurdles, he added.
In January, Philips terminated a planned $2.8 billion sale of
most of its Lumileds unit to a Chinese investor, after the
Committee on Foreign Investment in the U.S. blocked the deal on
national-security grounds. Lumileds makes components for
light-emitting diodes, or LEDs, and will be sold separately from
the other lighting activities.
Philips' decision to separate its nearly 125-year-old lighting
arm is part of a wider strategic overhaul in which the company
seeks to focus on its more profitable and faster growing
health-care business, where it competes with Siemens AG and General
Electric Co.
The company said tax charges related to the separation of the
lighting business contributed to a drop in earnings in the first
three months of 2016. Net profit was EUR37 million, a drop of 63%
compared with the same period a year earlier.
Adjusted earnings before interest and taxes, the company's
preferred measure of its operational performance, rose to 14% to
EUR374 million. Sales rose 3% to EUR5.5 billion.
The company maintained its guidance for 2016, saying it expects
earnings to improve despite global macroeconomic headwinds.
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
(END) Dow Jones Newswires
April 25, 2016 05:12 ET (09:12 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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