Philips to split business, form separate company

Philips to split business, form separate company

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Electronic giant Philips to break its business into lighting and healthcare-lifestyle companies.

Dutch electronics group Philips has announced that it will split its 120-year-old business into standalone healthcare-lifestyle and lighting focused companies on September 23, 2014. As per the company, although the restructuring would cost €50 million initially, once completed it will yield a saving of €100 million in 2015 and a further €200 million in 2016. 

Philips split business separate company

The two companies formed post restructuring, HealthTech (with 2013 sales at €15 billion) and Lighting, would continue to use the Philips brand and will hold their positions as market leaders.

The company also stated that the €7 billion lighting solutions business would be spun into a separate legal structure for which alternative ownership structures will be considered, with ensured direct access to capital markets.

Over the past few years, Philips has already demarcated its business focuses, venturing from advanced lighting technology to medical technology, where margins are higher and impact of emerging markets is lighter.

In 2013, the company had sold its lifestyle entertainment branch, which manufactures stereos and DVD players, after selling its TV-making business in 2012.

The electronic appliance group had also revealed in June 2014 that it was forming another company for its lighting activities, mostly for auto and mobile phone industries, citing a demand for energy efficiency.

Photo Credits: Live Mint