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Industryweek 10716 Philips Lighting

Philips Names Banks for Possible Lighting Unit IPO

April 4, 2016
The move is part of Philips CEO Frans van Houten’s plan to sell the lighting division, which makes products such as street lights, and focus the company on health care.

Royal Philips NV has named six banks and filed draft documents to the Dutch market regulator for a possible initial public offering of its lighting division even as a process to sell the business through an auction continues, according to people familiar with the matter.

Philips has named Citigroup Inc., ING Groep NV, Morgan Stanley & Co LLC and Societe Generale SA as joint bookrunners for the possible listing while ABN Amro Group NV and Cooperatieve Rabobank have been named joint co-bookrunners, said the people, who asked not to be named because the process isn’t public. The documents were filed to market regulator Autoriteit Financieele Markten, or AFM, for an opinion before a formal application is made, they said.

The move is part of Philips Chief Executive Officer Frans van Houten’s plan to sell the lighting division, which makes products such as street lights, and focus the company on health care. The Amsterdam-based manufacturer has kept its options open so far as to how the sale will be carried out.

Goldman Sachs Group Inc and JP Morgan Chase & Co. are running a “dual track” process to explore a possible direct sale to a buyer such as a private equity investor while the move to name banks for a stock market listing indicates that also remains a possibility. The sale could fetch about 5 billion euros ($5.7 billion), people familiar with the process have said in the past.

Melrose Withdraws 

Representatives for Philips, ABN Amro, ING, Citigroup and Morgan Stanley all declined to comment. A spokesperson at Rabobank didn’t immediately reply to a text message seeking comment, while a spokesperson at Societe Generale didn’t immediately reply to a voicemail seeking comment. Philips so far has said it intends to complete the lighting divestment in the first half of this year.

The direct sale process has been delayed, with final bids pushed back a week until April 18 and one potential bidder has dropped out, people familiar with the matter have said in recent days. U.K. investment company Melrose Industries Plc pulled out of the running, increasing the likelihood of an IPO, said the people who also could not be named because the process is private.

Melrose had concerns about the division’s business outlook and a lack of data, said the people. While the sale process continues, Philips and its advisers are preparing a potential listing and informally sounding out investors, they said.

Shares of Philips closed down 1.6% at 24.295 euros on Monday in Amsterdam, valuing the company at about 23 billion euros.

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