Royal Philips ($PHG) plans an IPO for its lighting solutions business during the first half of next year. It's slated to offer only a minority interest in the IPO, which will be followed subsequently by one or more follow-on offerings intended to fully divest Philips.
The conglomerate is in the midst of a refocus solely upon its combined healthcare and consumer businesses, dubbed HealthTech. It's launched a series of initiatives in order to do so--and the cash from the lighting IPO is slated to advance its HealthTech agenda.
"We currently intend to use the proceeds of the separation to deliver on our HealthTech strategy and aim to increase growth and drive profitability through a disciplined capital allocation policy," the company said in a shareholder letter dated March 19.
Separately, Philips has combined its automotive lighting and LED components businesses and is seeking a buyer for those as a standalone company. It expects to complete a deal during the first half of this year.
It's not quite clear yet what HealthTech priorities that Philips will spend all that cash on. The conglomerate defines its interest in healthcare as focused "the health continuum, from healthy living and prevention, to diagnosis, treatment, recovery and home care," in the letter. It identified the potential HealthTech market as worth more than €100 billion ($108 billion).
Its current Healthcare and Consumer Lifestyle businesses include ultrasound diagnostics, cardiac care, home healthcare and personal hygiene.
Wall Street hasn't been particularly enthused by Philips' first major healthcare acquisition under the HealthTech refocus, the $1.2 billion purchase of catheter-based imaging company Volcano which has had stagnant revenue growth that was announced in December.
Most recently, on March 19, Philips partnered with Inspirata to develop digital pathology analytics and workflow focusing initially on improving insights and algorithms for pathologists at U.S. cancer centers.
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| Perry van Rijsingen |
"The advancement of digital pathology offers pathologists the opportunity for improved working experience that can be an important next step toward improving diagnosis and better and more accurate treatment," Perry van Rijsingen, general manager of Philips Digital Pathology Solutions, said of the deal in a statement. "Reducing the investment required by institutions--particularly high-volume, high-touch ones like cancer centers--opens the door for more patients to benefit from this level of care and attention."
In 2014, Philips' healthcare sales declined 2% to €9.2 billion ($9.9 billion). Its sales overall for the year declined 1% to €21.4 billion ($23 billion).
Shareholders will take up the issue of the lighting spinoff in a May meeting. The lighting business will include three divisions that offer everything from traditional light bulbs to complete lighting systems. In the fourth quarter, the business had sales of about €2 billion ($2.1 billion) in the fourth quarter and has about 37,000 employees.
- here is the shareholder letter
- and here is a take from The New York Times