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Philips to merge LED components, auto lighting into standalone business

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[June 30, 2014]  By Thomas Escritt

 (Reuters) - Dutch lighting and healthcare company Philips said on Monday it would merge its Lumileds LED components and automotive lighting divisions into a standalone subsidiary which could potentially be spun off.

The company said its lighting division would remain a key customer for the new subsidiary but that it would look for third-party investors. It did not rule out becoming a minority shareholder in the business, which could also be floated.

The decision is the latest stage in Philips' shift from an electronics company into a healthcare and lighting business. The company began as an electric lighting pioneer 120 years ago.

Lumileds is a manufacturer of high-powered LED lights, while the automotive lighting division sells light sources to carmakers and auto parts and repair stores.

The two businesses had combined sales of about 1.4 billion euros ($1.9 billion) in 2013.

"As a strong standalone company they will have increased flexibility to attract investments and customers to accelerate growth and to exploit scale," Philips chief executive Frans van Houten said in a telephone briefing.

The process of merging the two divisions into one business, which will be led by current Lumileds CEO Pierre-Yves Lesaicherre, is expected to be completed in the first half of 2015 and to cost Philips about 30 million euros in the second half of 2014.

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Philips and the new subsidiary would continue to collaborate on research and development, van Houten said.

Philips said it could envisage both equity and debt investors being interested in the new company.

(1 US dollar = 0.7345 euro)

(Reporting by Thomas Escritt; Editing by Christopher Cushing and Pravin Char)

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