Electronics giant Philips to split in historic move

Philips said on Tuesday it would split the 120-year-old Dutch giant in two, separating its healthcare-lifestyle division from the historic lighting business in a dramatic streamlining move.

“We’re preparing Philips for the next century,” CEO Frans van Houten told a telephone press conference.

“Giving independence to our lighting solutions business will better enable it to expand its global leadership position and venture into adjacent market opportunities,” Van Houten said.

“I do appreciate the magnitude of the decision we are taking, but the time is right to take the next strategic step for Philips.”

Shares in Philips, the inventor of the compact disc, were up 3.26% to 24.27 euros immediately following the announcement, which analysts said could herald the selling off of the lighting business.

Both companies will continue to use the Philips name, the company said in a statement, noting that its HealthTech business had sales of 15 billion euros ($19 billion) in 2013 and its lighting business sales of seven billion euros.

Details on how its lighting business will be split off into a separate legal structure are to be announced in 2015.

“Both companies will be able to make the appropriate investments to boost growth and drive profitability, ultimately generating significantly more value for our customers, employees and shareholders,” Philips said.

The companies will be based in the Netherlands, Van Houten said, adding that it was too early to say how many job losses might be involved.

The global HealthTech is worth more than 100 billion euros and the lighting business worth more than 60 billion euros, Philips said.

The new structure should result in savings of 100 million euros in 2015 and another 200 million in 2016.

The move will also incur annual restructuring costs of around 50 million euros up to 2016, the company said.