• Melrose and Apollo said to also make it into second round
  • CVC and KKR said to drop out of bidding on outlook concerns

Royal Philips NV has selected buyout firms including Blackstone Group LP, Onex Corp. and Apollo Global Management LLC and U.K. investment company Melrose Industries Plc to advance to the second round of bidding for its lighting division, according to people familiar with the matter.

CVC Capital Partners and KKR & Co., who were working jointly with Onex, have dropped out of the auction because of concerns about the unit’s outlook, said the people, asking not to be identified because talks are private. The business, which makes end products including street lamps, could fetch about 5 billion euros ($5.6 billion), people familiar with the matter said earlier this week.

Talks are ongoing and the bidder list could still change, the people said. Representatives for Philips, CVC, KKR, Onex, Melrose and Blackstone declined to comment and Apollo couldn’t be immediately reached.

Philips is selling the lighting division along with its Lumileds business after scrapping a $2.8 billion sale of the smaller components unit to a consortium led by GO Scale Capital of China last month. Chief Executive Officer Frans van Houten is focusing on the company’s health-care business as demand increases for technology that allows hospitals to analyze clinical data and patients to monitor their health on smartphones.

Shares of Philips rose 0.9 percent to 23.20 euros at 9:14 a.m. in Amsterdam, valuing the company at about 21.6 billion euros.

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