Written by Oliver Sachgau, William Canny, and Ruth David. This article first appeared in Bloomberg Markets.
Siemens AG’s complete withdrawal from the lighting industry further scales back the once sprawling German conglomerate, as Chief Executive Officer Joe Kaeser offloads assets from trains to medical scanners to household equipment in rapid succession.
The Munich-based company completed the sale of its remaining 17 stake in light manufacturer Osram Licht AG, raising about 1.2 billion euros ($1.4 billion) and exiting a business in which it was involved for the better part of a century.
Siemens sold 18.1 million shares that were offered to institutional investors, the company said in statements after the market closed Wednesday. The stock sold at 65.05 euros apiece, according to people familiar with the matter who asked not to be identified because the information isn’t public. Osram shares fell the most in more than a year.
For Kaeser, the move came after Osram’s value more than doubled since an initial public offering in 2013, and a week after he unveiled a proposed combination of Siemens’s train business with that of Alstom SA of France. Siemens has also withdrawn from businesses making phones, hearing aids and ovens. For Osram, a former division of Europe’s biggest engineering company, the severing of ties comes after its own strategic shift into high-technology as energy-saving light-emitting diodes, or LEDs, eclipse classic light bulbs.
Deutsche, Citigroup
Osram shares fell as much as 5.1 percent, the most since July 27, 2016, and were trading down 3.5 percent at 64.74 euros at 10:36 a.m. in Frankfurt. That trimmed gains to 30 percent so far this year and gave a price that’s more than double the July 2013 initial public offering debut of 24 euros. Siemens fell 0.7 percent to 120.15 euros.
Proceeds from the Osram sale will be used for general corporate purposes, Siemens said, adding that it would retain a small number of shares required to service a bond plus warrant issue due in 2019.
Deutsche Bank and Citigroup Inc. advised on the sale, according to the people familiar with the matter.
“This has been a successful investment” for Siemens, Morgan Stanley analyst Ben Uglow said in a note, adding that he remains cautious on Osram. The stake sale “removes speculation around a strategic investor buying the Osram stake and potentially bidding for the whole company.”
Chinese lighting maker Sanan Optoelectronics Co. Ltd. said in October 2016 it had held talks with Osram about a possible acquisition. Apart from describing an “initial communication” with Osram and one meeting, the Chinese company said no binding documents were signed. Osram had poured cold water on the possibility that it would be acquired by Chinese investors.
Contentious
Osram sold off its traditional lamps business, moving along a different path from long-time competitor Philips Lighting NV. General Electric Co. also announced the sale of its light-bulb division. Amid its refocus, the market for infrared products has become one of Osram’s fast-growing businesses thanks to demand for a component used in smart phones to scan human irises.
Osram’s business refocus has been contentious, leading to a boardroom clash over strategy and a public spat with Siemens, until now its biggest shareholder. In a decision attacked by Siemens, Osram is spending about 1 billion euros on a Malaysian plant to make semiconductors for LEDs.
“We thank Siemens for accompanying us and for its role as a core shareholder over the last years since the listing,” Osram said in a separate emailed statement.