Philips announces spin-off of car lights unit

Electronics group Philips is gearing up to spin off its €1.4 billion (£1.12 billion) car-lights business, it said today.

The Dutch group, which has been reducing its consumer electrical business to focus on its healthcare division, said it will merge its Lumileds LED components and car-lighting divisions into a separate group that could be sold off.

Philips, led by chief executive Frans van Houten who has been implementing a turnaround since he took over in April 2011, said the group will explore “strategic options” to raise money from third-party investors but that it will remain a shareholder and customer of the new company.

Options include listing the new group where Philips could become a minority shareholder.

Lumileds, which makes high-powered LED lights, and its car-lights division have annual sales of around €1.4 billion. The merging of the two divisions will complete next year and will cost Philips €30 million in the second half of this year.

Van Houten has cut costs and last year sold Philips’ home-entertainment business to Japan’s Funai Electric.

The group has three divisions: lighting, consumer electricals and healthcare, which includes medical equipment for radiology, cardiology, oncology specialists.