AMSTERDAM—Royal Philips Electronics announced plans to sell a majority stake in its semiconductor business as the company transitions away from cyclical activities to focus on developing itself into a healthcare- and lifestyle-focused company.
Philips is selling an 80.1-percent stake in its semiconductor business, which supplies chips to customers including cell phone makers, to a consortium of private equity firms. The consortium includes Kohlberg Kravis Roberts & Co., Silver Lake Partners and AlpInvest Partners NV. Philips will keep the remaining 19.9-percent stake.
Following the transaction, the semiconductor business will operate as a standalone company led by Frans van Houten, currently chief executive officer of the unit.
The companies said the transaction values the business at about $10.6 billion, consisting of a purchase price of about $4.4 billion, $5.1 billion for debt and other liabilities and about $1.2 billion retained by Philips. The business generated sales of about $5.9 billion last year.
Philips said it expects to net nearly $8.2 billion from the sale, which is expected to close by the end of the year. A large portion of the proceeds are earmarked for dividends and share repurchases.
Philips said the transaction largely completes its transition to a healthcare and lifestyle business focused on such markets as medical systems, lighting and consumer health and wellness products.
