PHIA Koninklijke Philips NV

By Ian Walker 

Koninklijke Philips NV set the pricing for the initial public offering of its lighting unit on Monday, saying the spinoff could raise between EUR694 million and EUR844 million ($784.8 million to $954.5 million) for the company.

The Dutch electronics group said it wanted to sell shares in the unit at between EUR18.50 and EUR22.50, implying a market capitalization of EUR2.78 billion to EUR3.38 billion.

The final offer price is expected to be announced May 26, with unconditional trading in the shares on Euronext Amsterdam set to start May 31.

Philips is selling 37.5 million Philips Lighting shares, or 25% of the business, in the float to both institutional and retail investors. It has also offered the underwriters the opportunity to buy an extra 3.75% of the business. If these shares are taken up, the company will raise up to EUR970 million, depending on the final issue price.

Philips confirmed earlier this month that it would float the lighting business, which dates back nearly 125 years, as part of plans to trim the operation and devote more time to its more profitable and faster-growing health-care business, which competes with Siemens AG and General Electric Co.

Philips Chief Executive Frans van Houten said that as separately listed companies, Royal Philips and Philips Lighting will be better equipped to focus on innovation, entrepreneurship and long-term growth. Lighting Chief Executive Eric Rondolat said the new company will be committed to further expanding its global position in the general lighting market, driving the transition to LED and connected lighting systems and services.

The lighting business reported sales of EUR7.4 billion last year, making it one of the world's biggest lighting manufacturers. The unit comprises a declining traditional lamps operation as well as a fast-growing division called Lumileds, which makes lighting with energy-efficient light-emitting diodes, or LEDS.

Philips has previously explored a sale of its lighting business, but struggled to find a buyer. A deal to sell the Lumileds operation was agreed at the end of last year, but was terminated in January when U.S. regulators blocked the agreement on national security grounds. Philips said last month it hopes to close a new deal for Lumileds before the end of the year.

For the first quarter of 2016 the lighting division saw comparable sales decline by 2% as strong growth in LED sales was offset by a drop in sales of conventional lamps. Philips said the unit is expected to return to growth in the course of the year as growing demand for energy-efficient lighting is expected to boost LED sales.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

May 16, 2016 07:17 ET (11:17 GMT)

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