Dutch conglomerate Philips NV said on Tuesday that it will split into two new entities as part of a restructuring exercise, the Wall Street Journal reported.
Under the plan, the group’s lighting business will be a stand-alone firm, while the health care and consumer-lifestyle operations will be merged into a new company, the report said.
Philips said it will study “various options for alternative ownership structures” for its lighting business, including a spinoff, and that it will update investors in 2015, according to the report.
The new companies, which will continue to carry the Philips brand, will be better positioned to deliver long-term growth, the company was quoted as saying in a statement.
The measures are the latest and most significant step in the group’s efforts to streamline its operations and focus on a handful of higher margin activities, the Journal noted.
“I do appreciate the magnitude of the decision we are taking, but the time is right to take the next strategic step for Philips, as we continue on our transformation,” Chief Executive Frans van Houten was quoted as saying.
The new structure is expected to bring cost savings of 100 million euros (US$128.5 million) next year and a further 200 million euros in 2016.
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