(Reuters) -- Dutch supplier Philips said today it will merge its Lumileds LED components and automotive lighting divisions into a stand-alone subsidiary which could potentially be spun off.
Lumileds is a manufacturer of high-powered LED lights, while the automotive lighting division sells light sources to carmakers including the Volkswagen brand, Audi and BMW.
The businesses had combined sales of 1.4 billion euros ($1.9 billion) last year.
The spun-off lighting business will make components such as bulbs, auto headlights and high-powered LED lamps. Some analysts say LED car headlights, with their promise of higher premiums for the manufacturer, better fuel efficiency and more natural illumination of the road, are the next frontier for LED lighting technology.
The process of merging the two divisions into one business, which will be led by current Lumileds CEO Pierre-Yves Lesaicherre, is expected to be completed in the first half of 2015 and to cost Philips about 30 million euros in the second half of 2014.
Philips is reinventing itself after its TV, audio and video businesses struggled for years to compete with low-cost Asian rivals and prompted a spate of profit warnings at the firm. It has sold off its television business, cut more than 5,000 jobs and concentrated on growing its healthcare products.
Philips did not give a valuation for the new business, but ING analyst Robin van de Broek estimated it could be worth about 2 billion euros.