Siemens Exits Lighting With $1.4 Billion Sale of Osram Stake

Updated on
  • German engineering company sells 17% stake in former unit
  • Siemens clashed with Osram in past over business strategy

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 percent 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, and didn’t get enough demand from investors for all the shares, 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 Siemens has also withdrawn from businesses making phones, hearing aids and ovens.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 4.5 percent to 64.02 euros at the close in Frankfurt, the most since July 2016. That trimmed gains to 28 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 1.3 percent to 119.4 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. The banks will probably will try to sell any remaining stake in the market over the next few days, said the people. Shareholders need to disclose their holdings in a company when they cross 3 percent of voting rights. 

Representatives for Citigroup and Deutsche Bank declined to comment.

Osram had about 4.3 million shares traded across all exchanges Thursday. The average daily volume across exchanges in the three months before the sale was around 450,000 shares traded.

‘Successful Investment’

“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.

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.

To read more about Osram’s Iris-Scanning App and Opto division, click here

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.

    Before it's here, it's on the Bloomberg Terminal.