Siemens says postpones IPO of Osram unit

A shareholder arrives for Siemens annual shareholders meeting in Munich January 25, 2011.

FRANKFURT, SEPT 14 - Siemens (SIEGn.DE) pushed back a planned multi-billion euro listing of light bulb unit Osram to a later date, becoming the latest victim of market volatility which has dented the hopes of a September revival in Europe's lackluster new listings market.

The postponement also deals a blow to shareholder hopes of a special dividend this year after a hefty dividend payment for last year whetted investor appetite for more given its cash pile of around 15 billion euros ($20.51 billion).

"In view of the highly volatile environment on the capital markets and possible effects on the industry ... Osram is to be listed at a later date," the Munich-based engineering conglomerate said in a statement on Tuesday.

Siemens was "firmly holding to its plans" to list the subsidiary, it added.

The listing of Osram, the world's second largest lighting maker after Philips (PHG.AS), had been slated for the European autumn.

But speculation had been growing it would be postponed as weak and unpredictable markets dented hopes of many IPO deals being done in Europe in the fourth quarter.

Siemens' announcement confirmed a Reuters report on Monday, which cited sources as saying Europe's biggest engineering company was set to hold off on Osram's public flotation until next year.

"That's exactly what was expected and could be heard over the last days. It's still a strong signal though: the IPO market is dead and if a company like Siemens can't pull it off, no one can," a Frankfurt-based trader said.

German chemicals and real estate conglomerate Evonik EVON.UL had decided to postpone a planned IPO expected to raise as much as $7 billion, sources told Reuters last week.

Lighting analysts have noted Osram's Austrian rival Zumtobel last week had flagged some uncertainties on demand as indicators point to a slowdown of global growth and the recent market turmoil could crimp willingness among customers to start new projects.

Osram generated 4.7 billion euros of revenues last year and posted 534 million EBIT, generating an 11.4 percent operating margin that made it a cash cow for Siemens.

With Osram's 105-year-old history and strong distribution, Siemens had hoped to cash in also on the unit's strong patents but its valuation has plunged since March, when the IPO plans were unveiled, taking a hit from worldwide economic uncertainty, tough competition and price declines.

Siemens had said it wanted sell 50 percent plus one share and remain an anchor investor, implying a target holding of 25 percent plus one share for a blocking minority vote with a say on strategic issues.

The light sources from Osram, the only business unit that does not bear the Siemens brand, are used to illuminate the giant Jesus Christ statue at Rio de Janeiro, as backlighting displays in mobile phones, and for special applications such as endoscopy and purification of drinking water.

Analyst Bernd Laux of Cheuvreux said he believed Siemens would list Osram in the first half of next year.

"I believe they would not postpone for very long, I think they would bring to the market in the spring next year," Laux said.

Siemens has adopted a more shareholder-friendly approach this year after meeting its goal to match rivals' margins.

It announced a 69 percent rise in dividend for its last fiscal year ended September 2010

While Siemens has signaled it would use some of the money for bolt-on acquisitions, investors had also hoped a portion of it would trickle down to them, an expectation that was cemented when Siemens announced Osram's IPO in the spring.

Analyst Ulrich Trabert of Metzler, who wrote in a note to clients on Tuesday about the possibility of a delay, said such news would have a negative impact on Siemens.

"This could be negative news still, as investors might have aimed at a special dividend resulting from an IPO cash-in," Trabert said.

Siemens, whose products range from fast trains and steam turbines to hearing aids and engineering software, said in November its future dividend payout ratio will be 30-50 percent of net income, signaling its confidence in the future.

Siemens announced early this year its target of net debt to EBITDA level of 0.5 to 1.0 times, prompting analysts to speculate the company would have the opportunity to deploy some 15-22 billion euros of cash through acquisitions or special dividends to shareholders for the current business year that ends on September 30, 2011.

Its shares closed 3.12 percent higher on Wednesday at 66.85 euros, in line with Germany's blue chip index DAX .GDAX.

($1 = 0.731 Euros)

(Additional reporting by Christoph Steitz in Frankfurt and Kylie Maclellan in London; Editing by Elaine Hardcastle)