Philips sells $2.18B stake in LG.Philips LCD joint venture

By Colleen Taylor, Contributing Editor -- Electronic News, 10/10/2007

Dutch electronics titan Royal Philips Electronics NV is continuing to succeed in its plans to slim down: The company today announced that it has sold 46.4 million shares of common stock in LG.Philips LCD Co. Ltd. (LPL) to financial institutions in a capital markets transaction.

The transaction represents 13 percent of LPL's issued share capital, and reduces Philips' holding to 19.9 percent. Philips has been involved in LPL since 1999, when it spent $1.6 billion to buy a 50 percent share in LG Electronics' LCD business.

The deal, which closed today, will provide Philips with net proceeds of about $2.18 billion (1.55 billion Euros) and is expected to result in a non-taxable gain of approximately $705 million (500 million Euros) in Q4 of this year. Philips said in a statement that it may decide to sell additional shares to the same financial institutions later today "to meet additional demand, if any."

The sale comes as no surprise to industry watchers. More than a year ago, Philips publicly acknowledged its intent to streamline its company's focus and define its brand's "promise of sense and simplicity." For Philips, the company said, that means concentrating on its core consumer-products, lighting and medical-equipment businesses. Then, in September 2006, Philips spun-off its semiconductor arm into stand-alone company NXP Semiconductor. 

In July of this year, Philips began taking concrete steps toward decreasing its stake in both LPL and NXP. Also in July, Philips sold its controlling stake in French semiconductor wafer maker Ommic S.A.S. to France-based financial services conglomerate Financière Victoire SAS for an undisclosed amount. Earlier, in May, Philips sold $2.5 billion of its stake in foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).