The Spin-off of OSRAM Licht AG from Siemens Promotes Osram to Expand Chinese Market

Today, Siemens formally spins off OSRAM Licht AG and lists it in Germany. Analysts believe that Osram will be provided with more adequate funds and a more flexible organizational structure to grasp the rapidly growing opportunities of the global LED lighting after the spin-off. It is expected that OSRAM will increase the intensity to extend the Chinese LED lighting market.

As one of the global lighting giants, Osram was originally a wholly owned subsidiary of Siemens. In November of 2012, Siemens planned to spin-off 80.5% of OSRAM's shares to shareholders, and then separately listed Osram. According to the spin-off plan, every 10 shares the existing Siemens shareholders hold in the hands will receive one Osram share. After the spin-off, Siemens still holds 17% Osram stake, Siemens Pension Trust holds 2.5% stake. In January of 2013, the program to spin-off OSRAM from Siemens was approved in the ratio of 98% on Annual General Meeting.

Siemens estimates that LED lighting will account for 45% of the global lighting market share by 2016, revenue is about 99 billion Euros; the market share will rise to 66% before 2020, revenue will be about 113 billion Euros.

In view of the sale revenue, Osram is only second to Philips, and ranks the second in the global LED lighting industry. In fact, in recent years, OSRAM's LED layout in China has been accelerating. A middle manager of Osram in China said that Osram will put its LED packaging factory in Wuxi put into operation in October; also established LED R & D center in Shenzhen; the output of LED lighting end products in Foshan factory is also increasing.

After the spin-off of Osram, the competition among the major international lighting giants in China will become more intense, China's domestic LED chip corporates will undergo great pressure. "Global LED chip giants like Philips, Osram, and Cree want to expand business; the application market has become the focus. Osram will also strengthen the channel expansion in Chinese LED lighting market."

Foreign media reported that Siemens shares may fall in value after the spin-off of Osram, some institutional investors will be forced to sell immediately, which lead to Siemens to face "considerable selling pressure".

After the spin-off, once Osram extends its business, Siemens will benefit from it, even though Siemens holds less stake of Osram. Moreover, Siemens also returned a lot of money. "Last year, Siemens was ready, and now the capital market is better, then financing opportunities is better."

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