Philips to give lighting business 'independence' Philips, the world leader in lighting, is taking another big step to distance itself from the business in what could be an eventual spin-out.

CEO Frans van Houten announced this morning that the company is 'giving independence' to the €7 billion Philips Lighting division as part of a restructuring that keeps healthcare and consumer products like shavers and coffee makers at Philips' core.

Philips is already shopping around for new investors in its LED chip business, called Lumileds, and its automotive lighting operations. The company said in a press release that it will now 'consider various options for alternative ownership structures with direct access to capital markets' for the rest of the lighting business which it calls 'lighting solutions' – everything from bulbs to commercial lighting to control systems.

Lighting solutions will keep the Philips name but operate under 'a separate legal structure,' the release stated.

The move marks the latest in an ongoing revamp of the 123-year-old Dutch giant, which has made light bulbs practically since its inception and which in recent years has shed its iconic television, stereo and DVD and semiconductor operations.

It is a mark of how hard it is to make money in the lighting industry which has shifted away from selling bulbs to selling services based around new LED (light emitting diode) bulbs that are meant to last for decades.

'I do appreciate the magnitude of the decision we are taking, but the time is right to take the next strategic step for Philips, as we continue on our transformation,' van Houten said. 'Giving independence to our Lighting solutions business will better enable it to expand its global leadership position and venture into adjacent market opportunities.'

The release further noted that, 'As a stand-alone company, the Lighting solutions business will benefit from improved speed and agility in its operations to deliver innovation and capital market access to boost growth in connected LED lighting systems and services, more than offsetting the decline of conventional lighting.'

Philips said it will provide more information in 2015.

Lux will try to provide more analysis sooner than that.

Just a thought: As lighting veers toward the world of Internet controls, connected things, and smart cities, maybe the likes of Google could climb into the new ownership.

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Photo of Philips Amsterdam headquarters is from Wikimedia

 

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