Philips to Sell Stake in Chip Unit

Royal Philips Electronics announced Thursday that it had agreed to sell an 80.1% stake in its semiconductor unit to a private equity consortium for about $8.2 billion.

The group, consisting of U.S.-based private equity firms Kohlberg Kravis Roberts & Co. and Silver Lake Partners along with Dutch-based AlpInvest Partners, will buy the stake. Amsterdam-based Philips will retain the remaining 19.9% stake in the business, the company said.

“This is a defining moment for both Philips and its semiconductors business,” Philips President and Chief Executive Gerard Kleisterlee said. “As a stand-alone company, the semiconductors business will have every opportunity to realize its full potential, and we are very pleased to have found strong partners that share our belief.”

Kleisterlee said the sale would allow Philips, best known for its consumer electronics products, to “fully focus” on its healthcare and lifestyle products.

The unit makes chips for cellphones, MP3 players, televisions and cars. Operating profit at the division was 307 million euros ($389 million) last year on sales of 4.6 billion euros ($5.8 billion).

Philips announced in June that it planned to spin off a majority stake in the unit, a move that is expected to reduce volatility in Philips’ earnings that was caused by the cyclical nature of the semiconductor industry.

Philips was the world’s ninth-largest maker of semiconductors by sales last year.