Philips Shareholders Approve Spinoff of Lighting Business

By Maarten van Tartwijk

AMSTERDAM--Koninklijke Philips NV (PHIA.AE) on Thursday moved a step closer to splitting itself into two after investors approved a plan to spin off the company's nearly 124-year-old lighting business.

Shareholders voted almost unanimously in favor of the split at a meeting in Amsterdam, clearing the way for what will likely be an initial public offering for the lighting business. Philips has said the listing could occur in the first half of 2016.

The plan echoes a decision by Siemens AG (SIE.XE), the German engineering giant, which in 2013 listed its Osram Licht AG lighting business. Philips Lighting and Osram compete with the lighting division of U.S.-based General Electric Co. (GE).

The separation of the lighting business would mark the end of an era for Philips, which was founded on May 15, 1891, as a producer of light bulbs. The lighting arm laid the foundation for Philips's growth into one of Europe's largest industrial companies in the 20th century.

"It was an emotional decision and it was not taken lightly. But I believe that this is the right next step," Chief Executive Frans van Houten said. "We should not be sentimental about our heritage."

Philips announced the plan in September following a series of profit warnings and criticism that its corporate structure was slowing it down. Once the lighting business is divested, the company will focus on selling medical equipment, such as hospital scanners, and consumer electronics products, such as coffee machines and electric toothbrushes.

Mr. van Houten said the lighting business, Philips's second-largest division with 6.87 billion euros ($7.8 billion) in sales in 2014, will be better able to grow as a standalone company.

Write to Maarten van Tartwijk at [e-mail]

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