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UPDATE 3-Osram to spark lighting M&A after Siemens spin-off

Published 03/29/2011, 06:55 AM

* Siemens says Osram will look for partnerships

* Says plans IPO of Osram light bulb unit in late 2011

* Says to sell more than 50 percent of Osram in IPO

* Siemens shares down 0.8 percent, in line with DAX index

(Adds further details, updates shares)

By Edward Taylor and Roberta B. Cowan

FRANKFURT/AMSTERDAM, March 29 (Reuters) - Lighting group Osram will pursue takeovers and alliances once it is spun out of German conglomerate Siemens in an initial public offering (IPO) late this year.

Osram, the world's No. 2 player in the 40-45 billion euros ($56-64 billion) lighting market after Philips, will be listed as part of a revamp of Siemens, Europe's biggest engineering company.

"There will be a lot of opportunities for collaboration with other companies," Siemens Chief Executive Peter Loescher told Reuters Insider television on Tuesday.

Kepler analyst Peter Olofsen said he expects Osram to target more lighting and fixtures companies in Europe, where many players are only active in parts of the market or a limited number of countries.

Osram, estimated to be worth 5-7 billion euros, ranks above General Electric and competes with Panasonic and CREE.

Lights made by Osram, a company with a history spanning more than 100 years, illuminate the statue of Jesus Christ in Rio de Janeiro as well as the Oktoberfest in Munich.

Shares of Philips rose on news of the planned IPO, and were up 1.0 percent at 1034 GMT, while Siemens shares fell by 0.8 percent. The Dutch company declined to comment on the Siemens plan.

ING analyst Sjoerd Ummels said he expects Osram's valuation to be boosted by the IPO, as it will no longer be held back by Siemens' lumbering conglomerate structure.

He said 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, he said.

Spinning off Osram -- the only unit within the conglomerate which does not carry the Siemens brand -- will free up capital and allow Siemens to tap into a growing green energy market, Loescher said.

SELLING THE REST

Siemens plans to sell off just over 50 percent of Osram, chief financial officer Joe Kaeser said. It is looking to complete the flotation in the latter part of 2011 and will remain a major long-term shareholder.

"I could also imagine an IPO in several steps," Ruland Research analyst Heino Ruland said.

"Siemens would first sell a majority, then reduce its stake to 25 percent and eventually sell the rest."

Kaeser said no banks had been mandated for the deal, which will be the biggest German IPO since Deutsche Post floated in 2000.

Osram will have a solid supply of capital and is looking at a credit rating of A minus or BBB plus, Siemens said.

The Osram flotation is part of a larger overhaul of Siemens announced on Monday under which it will create a fourth division, "infrastructure and cities", alongside existing energy, industry, and healthcare units.

Loescher said he would continue to slim down a company which makes everything from high-speed trains to light bulbs. Siemens has already taken a more active spin-off strategy, selling IT unit SIS in December, as well as a minority stake in military tank maker Krauss-Maffei Wegmann.

The Osram spin-off would have no impact on Siemens's outlook for the current year, Loescher said.

Loescher hinted at acquisitions, saying Siemens has a revenue target of 100 billion euros in the mid-term, including "inorganic growth". It had 2010 revenues of 76 billion euros. (Additional reporting by Axel Threlfall in London, Tom Koerkemeier in Frankfurt; Writing by Alexander Smith and Maria Sheahan; Editing by Dan Lalor and Mike Nesbit) ($1=0.7084 euros)

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