Royal Philips announced on Monday that it plans to combine its LED and Automotive lighting units into one unit within the Philips group, part of its strategy to accelerate growth and scale.

The Netherlands-based company said it intends to remain a shareholder and customer of the new business, and will continue the existing innovation collaboration.

The current chief executive officer of Lumileds, Pierre-Yves Lesaicherre, has been chosen to lead the new company as chief executive officer.

The company said it will start the process of combining the businesses in the second half of 2014, also will explore strategic options to attract capital from third party investors for the new business.

The sales of the combined businesses were $1.91 billion (EUR 1.4 billion) in 2013 and costs associated with setting up the unit are expected to be around $40.9 million (EUR 30 million).

Frans van Houten, Chief Executive Officer of Royal Philips said in a statement that the company’s “strategy in lighting is to intensify its focus on connected LED lighting systems and services, LED luminaires, and LED lamps for the professional and consumer markets. Both our Lumileds and Automotive lighting businesses are strong players in the lighting industry and ready to pursue more growth and scale, independently of Philips Lighting. As a world-leading lighting components business, they will have increased flexibility to attract additional investors to accelerate growth.”

The company said it is confident that the combined business will be able to extend its leading portfolio of digital lighting components and achieve robust growth, serving even more customers in the industry.

“By combining Philips Automotive lighting and Lumileds, the Automotive lighting customers will continue to benefit from a fully integrated end-to-end R&D and supply chain, enabling the adoption of LED technology in automotive applications,” said Philips Lighting Chief Executive Officer Eric Rondolat.

The process to combine the LED and Automotive into an integrated business within the Philips Group is expected to be completed in the first half of 2015.

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