Philips shares fall as it considers lighting unit IPO

Philips shares slumped the most in eight months on prospects the Dutch manufacturer will sell its lighting division through an initial public offering, earning less than a private sale, which has so far been unsuccessful. 

An improvement in stock market conditions during the past couple of months means an IPO “increasingly appears a more likely outcome,” Philips said in an earnings statement, adding that a decision will be made shortly after a conclusion has been reached on all proposals in the alternative sale process.

“The potential of an IPO would result in lower expectations about the proceeds,” Actiam portfolio manager Corne van Zeijl said.

Private equity investors don’t appear to be very interested in the unit, meaning Philips won’t net a top price for the division, he said.

This is the first time chief executive Frans van Houten has said publicly that Philips may opt for an IPO over a private sale of the lighting division, which had $8.3 billion (€7.39bn) in annual sales and makes products such as street lights.

Philips, which will focus on health care, has so far kept its options open on how the sale will be carried out, although it named six additional banks and filed draft documents for a share sale, people familiar with the matter said earlier this month.

The shares fell as much as 5.5% at one stage in Amsterdam yesterday.