* To cut thousands of jobs, mostly outside Germany -sources
* Siemens board meets Nov. 27, Osram board Nov. 28 -sources
* Osram spin-off prospectus to be published Dec. 7 -sources
* Siemens, Osram decline to comment
By Jens Hack
MUNICH, Nov 22 Siemens AG's lighting
unit Osram is planning a restructuring including thousands of
job cuts before it is spun off next year, sources said.
The programme will cost about 500 million euros ($640
million) and will affect mostly sites outside Germany, several
people familiar with the matter told Reuters.
Siemens and Osram declined to comment.
Siemens plans to spin off most of Osram, the world's No. 2
player in the 40 billion euro lighting industry after Philips
, in the European spring of next year, having scrapped
plans for an initial public offering (IPO) on weak markets.
Like its peers, the company has been hit in recent years by
a shift from traditional light bulbs to more energy efficient
and durable light-emitting diodes (LEDs) and pricing pressure
from Asian rivals that can produce more cheaply.
"In the last hundred years the lighting business has been
dominated by GE, Philips and Osram. Now new, financially strong
providers have joined the game, like LG, Samsung or Cree," said
a senior official at Osram, who declined to be named.
Osram, which generates annual sales of about 5 billion
euros, has 44 factories in 16 countries and has already shrunk
its workforce by 2,000 to 39,000 over the past year.
Analysts estimate the company's value at 3-5 billion euros,
but that could change when it publishes details of its finances.
Siemens' supervisory board will sign off on the timing and
some details of the spin-off at its meeting on Nov. 28, the
sources said. The following day, Osram's board meets.
The prospectus for Osram will be published on Dec. 7, along
with the invitation to Siemens' annual general meeting on Jan.
23, where shareholders will be asked to approve the flotation.
The sources told Reuters that Siemens plans to keep less
than a fifth of Osram while transferring the rest to its own
shareholders, having become unwilling to invest in the business
to keep up with Asian rivals.
"The LED market will grow significantly. But that also means
that one needs to invest a lot. Our parent (Siemens) was not
prepared to play that game," the Osram official said.
LEDs are used to for flat-screen televisions and tablet PCs
but are also becoming increasingly popular as a source of
general lighting, in shops or restaurants or for outdoor
Consultancy McKinsey sees the LED market reaching a volume
of almost 65 billion euros by 2020, accounting for close to 60
percent of the overall lighting market. That would make it
similar in size to the global market for TVs, it says.
Also, as in other technology industries such as software and
smartphones, fierce competition in the LED sector is prompting a
flurry of patent suits.
In August, Samsung and Osram settled a more than year-long
LED patent battle in a settlement that a source said was
"unbelievably expensive" for Osram.