FRANKFURT: Siemens has mooted floating up to 75 percent of Osram if investor demand is strong, in what would be one of Europe's biggest stock market listings this year.
Siemens executives have told analysts the German industrial conglomerate plans to float between 50 percent and 75 percent of the world's second largest lighting maker after Philips, one source familiar with the planned initial public offering (IPO) said.
"We want to float the majority of Osram but we at the same time want to be an anchor investor in Osram," Siemens Chief Executive Peter Loescher told Reuters Insider TV on Wednesday.
"The process has kicked off and everything is according to plan," he said. CFO Joe Kaeser added that Siemens will mandate the banks for the Osram IPO shortly.
Siemens has said it is looking to complete an IPO of Osram, which analysts estimate to be worth as much as 7 billion euros ($10.3 billion), in the European autumn of 2011 and remain a major long-term shareholder thereafter.
"If Siemens finds there is appetite for 75 percent, then they'd list 75 percent. But the history of Siemens is to do things in slow steps. Even just taking the decision to list Osram took a very, very long time," one analyst said, who declined to be named.
Analysts estimate that Osram could be floated at 11.5 times 2012 earnings before interest and tax (EBIT).
That compares with a current valuation of Philips Lighting of 10 times 2012 EBIT. Operationally, the group is on track, Loescher said. "Osram just had the best quarter. They are performing very well relative to their competitors," he said.
The IPO of Osram could come alongside with chemicals group Evonik [EVON.UL] and shipper Hapag-Lloyd, which may float after the summer break, several bankers familiar with the processes said.
Evonik's enterprise value is seen at more than 20 billion euros while media reports have put the value of Hapag-Lloyd at 3.0-3.5 billion.
Analysts said an IPO in the autumn would require the banks given the mandate to write the research note in August in time for marketing purposes, which means Siemens needs to award the mandates to the banks by June at the latest.Banks likely to win the IPO mandates are Deutsche Bank, Goldman Sachs and JP Morgan, bankers and analysts said.
Siemens had considered the option of selling Osram outright before opting for an initial public offering, two people familiar with the company's thinking said.
But buyers either lacked the scale to swallow an asset of that size, or faced anti-trust issues in the wake of any purchase.
"I think Siemens are going to test the investor appetite for the IPO. In 2-3 years' time there's going to be huge competition in LEDs, so the question for an IPO investor is why do you want to buy Osram now. You have to be convinced," the analyst said.
Light emitting diodes (LED) are used as a light source in chips and are increasingly used for lighting in consumer electronics, such as a backlight for televisions and monitors, and in the automotive industry.
But analysts expect tougher competition from Asia, with several competitors from Korea and China threatening to steal market share from industry leaders just as the transition to super-efficient lighting gets under way.
"There will be competitors coming from a region that has lower input costs Taiwan, China, Korea and they have nothing to lose but everything to gain," a German-based analyst said, adding: "The Chinese will still need two to three years."
"There exists an interest in the market for Osram, provided the equity story and price range are reasonable," he added.
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