Philips More Likely to Sell Lighting Unit Via IPO Than Private Sale

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, citing improved sentiment in financial markets.

The Dutch electronics company is in the midst of separating its lighting arm and previously said it was exploring either a sale or a listing. It has received several offers for the business, which could be valued by as much as EUR5 billion ($5.6 billion).

In its latest earnings report, Philips 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," the company said. A decision could be announced "shortly", it added.

Philips is in the final phase of separating its nearly 125-year-old lighting arm and has previously said it expects a sale to take place before the end of June. The move is part of a wider strategic overhaul in which the company seeks to focus on its more profitable and faster growing healthcare-technology activities and related products.

The Amsterdam-based firm 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, expecting modest comparable sales growth.

Write to Maarten van Tartwijk at [e-mail]

(END) Dow Jones Newswires

April 25, 2016 02:42 ET (06:42 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.