Philips Lighting NV shares jumped in their trading debut after Dutch parent company Royal Philips NV raised 750 million euros (US$839 million) in an initial public offering (IPO) of the world’s biggest general luminaries business.
Shares rose 5.7 percent to 21.14 euros at 9:02am in Amsterdam, the Netherlands.
Investors paid 20 euros each for 37.5 million shares in Philips Lighting, Amsterdam-based Philips said in a statement on Thursday on pricing, which was near the middle of the range marketed by banks at 18.50 euros to 22.50 euros a share.
The parent manufacturer opted for a listing in Amsterdam after failing to conclude a private sale of the whole business. The flotation underscores Philips’ shift toward making equipment and consumer goods for the global healthcare market, such as scanners and shavers.
Philips Lighting’s biggest competitors are Osram Licht AG, spun off from Siemens AG, and General Electric Co in the production of conventional lights and LEDs.
“I am pleased with the response of investors towards Philips Lighting and the successful pricing of the IPO,” Royal Philips chief executive officer Frans van Houten said in the statement. “This strategic milestone will allow Royal Philips to focus on the fast-growing health technology market.”
The sale of the 25 percent shareholding, before the exercise of an overallotment option, gives the company a market value of 3 billion euros and an implied enterprise value of 4.5 billion euros including debt and debt-like items, according to the statement.
Philips will retain the remaining stake, which will amount to 71.25 percent assuming full exercise of the overallotment. Shares started trading on Euronext Amsterdam.
Philips has said it plans to fully sell down its holding over the next several years. The lighting unit dates back to 1891 when Frederik Philips and his son started selling incandescent lamps.
Philips Lighting is targeting an annual stock dividend of 40 to 50 percent of its continuing net income to be paid out in cash, with the first payment expected next year, Royal Philips has said.
The lighting division reported 547 million euros in profit last year and 7.47 billion euros in sales.
The total volume of lamp sales is expected to decline in the coming years because LEDs last longer, according to Philips’s IPO documents.
Higher prices for LEDs and increasing demand because they are more energy efficient will not make up for less revenue from traditional lighting, it said.
In hiving off part of the lighting unit, Philips is treading a similar path to healthcare equipment competitor Siemens, which spun off Osram in 2013 and has retained a 17 percent stake. As Osram’s biggest shareholder, Siemens has since clashed with management over strategy and tried earlier this year to oust its CEO.
Dutch companies are announcing a slew of IPOs this month after a sluggish start to the year and a push to list before the UK’s “Brexit” vote on June 23, which could create stock-market concerns. The Philips unit IPO is expected to be the biggest among those anticipated this quarter in the Netherlands.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to