Dutch electronics giant Philips has said it is planning to split the company in two, separating its lighting business from its healthcare division.
Both companies will continue to be based in the Netherlands and use the Philips name, it said in a statement.
Philips has been streamlining its business by selling off underperforming parts of the business in recent years.
Chief executive Frans van Houten said the move was meant to prepare the company for “the next century”.
“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,” he said.
“Both companies will be able to make the appropriate investments to boost growth and drive profitability, ultimately generating significantly more value for our customers, employees and shareholders”.
Philips, which began as a lighting company back in 1891, said the separation would make it easier for the lighting business to enter new markets.
It also said it would consider “various options for alternative ownership structures” for the lighting arm, meaning it could potentially be sold or listed separately on the stock market.
Mr van Houten said separating the two divisions would cost it 50m euros (£39m) a year until 2016, but by 2016 he expected the split to save it about 300m euros.
The firm also warned that legal costs as well as “softness in multiple markets” meant its operating profit for the second half of the year would be lower than the same period last year.
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