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.
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