Dutch electronics giant Philips announced today it would float 25 per cent of its shares in a highly anticipated IPO set for May 27 which could raise almost one billion euros.
The Amsterdam-based company said it would release some 37.5 million shares – with an option of releasing more if the offer is over-subscribed – aiming at raising between 694 million euros to 970 million euros (USD 784 million to USD 1.09 billion).
Philips in September 2014 announced it was selling off its core lighting business – a mainstay of its income for more than a century – to focus more on medical equipment.
The expected price range for the initial public offering would be set at between 18.50 euros to 22.50 euros, valuing the lighting arm at around 2.78 to 3.38 billion euros.
But in a statement today, the company acknowledged it would also bear a debt of 4.32 to 4.92 billion euros.
“Today’s announcement is an important next step in the planned initial public offering of Philips Lighting on Euronext Amsterdam, signalling that the process is well on track,” said chief executive Frans Van Houten.
Philips sold its first light bulb a few years after it was founded in 1891, but for the past dozen years has increasingly shifted its focus to medical equipment, which now accounts for more than 40 percent of sales.
Philips said it was making the move into medical technology where margins are strong and less vulnerable to competition from emerging markets.
Its lighting business, which produces LED lights, halogen and fluorescent lamps and other electronic components, however remains a major money-spinner, selling products in around 180 countries.
Last year Philips Lighting raked in 547 million euros in adjusted earnings before interest, tax, and amortisation, the company said.
It has manufacturing plants in more than 20 countries and holds a patent portfolio of over 14,000 patent rights.
The offer and subscription period opened at 9:00 am (local time) today and will remain open until midday on Thursday for some investors.
Company officials said the interest they had already received was “very encouraging” and had pledged to release up to 28.75 per cent of shares if the IPO was oversubscribed.
“As a standalone, listed company we will be committed to further expanding our global market-leading position in the general lighting market,” said the chief executive of the lighting arm, Eric Rondolat.
The net proceeds of the sale will go to Royal Philips, and the remaining shares will be sold off over the coming years, the company said in its statement.