Oct. 10 (Bloomberg) -- Royal Philips Electronics NV, Europe's largest consumer electronics maker, sold LG.Philips LCD Co. shares for 1.55 billion euros ($2.2 billion), taking advantage of a surge in the company's stock this year.

Philips sold 46.4 million shares, equivalent to a 13 percent stake, and will book a non-taxable gain of about 500 million euros from the transaction in the fourth quarter, the Amsterdam- based company said in an e-mailed statement today.

LG.Philips, the world's second-largest maker of liquid- crystal displays, reported its biggest profit in more than three years yesterday, saying a shortage drove up prices of computer screens. Philips said in July it would lower the stake in LG.Philips to less than 20 percent this year. A lock-up on its 32.9 percent stake in the venture expired in July.

``This is positive for LG.Philips as the discount was not that big and the LCD industry is improving,'' said Jay Yoo, an analyst at Korea Investment & Securities Co. in Seoul. ``Philips is selling at a favorable time especially right after LG.Philips' earnings.''

Philips rose 60 cents, or 1.9 percent, to 32.03 euros in Amsterdam, bringing the gain this year 11 percent. LG.Philips shares have gained 62 percent this year.

May Sell More

Citigroup Inc. and Credit Suisse Group arranged the sale.

``Philips may decide to sell additional shares to the same financial institutions later today to meet additional demand, if any,'' the company said in the statement.

Gerard Kleisterlee, Philips' chief executive officer, is selling assets to raise cash for dividends, stock buybacks and acquisitions in the company's lighting, medical equipment and consumer electronics units over the next three years.

LG.Philips, formed in 1999 as a venture between LG Electronics Inc. and Philips, has led a rally this year in shares of LCD makers, which have taken market share from rival plasma and glass-tube display makers.

Hsinchu, Taiwan-based AU Optronics Corp., the third-largest LCD maker, has gained 40 percent. Chi Mei Optoelectronics Corp., the fourth-largest producer, has gained 28 percent in Taipei.

Third-quarter global demand for LCD panels probably rose 12 percent from the previous three months, according to James Kim, an analyst at Lehman Brothers Holdings Inc. Sales of LCD televisions will probably rise 86 percent to 78 million sets this year, while plasma TVs will increase 22 percent and glass-tube TVs will fall 18 percent, according to Kim.

Philips sold a majority stake in its semiconductor unit last year and shares in Taiwan Semiconductor Manufacturing Co. to free up cash. Philips sold a majority stake in its chip unit to a group of buyout firms including Kohlberg Kravis Roberts & Co. last year. The company has also sold about half of its 16.2 percent stake in Taiwan Semiconductor since it said on March 9 it would exit the world's largest customized-chip maker by 2010.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.

Last Updated: October 10, 2007 11:44 EDT