Philips to shed $450 mn NXP stake

LONDON, UK: Dutch electronics group Philips Electronics said it will use its stake in chipmaker NXP Semiconductors to help address the deficit in its British pension fund, booking a gain in the process.

Philips said on Tuesday it would make a cash contribution of 350 million euros to the pension fund, which the fund would then use to buy the 17 percent of NXP the Dutch firm still owns.

The sale will lead to a 140 million euro gain in the third quarter, Philips said.

Philips shares fell 0.2 percent in early Amsterdam trading. Analysts said the deal would not have a material impact on Philips, even though they were surprised by the size of the transaction.

"The one-off contribution to the UK pension fund is somewhat higher than we had pencilled in," SNS Securities analysts said in a research note.

Philips said in its 2009 report that it was reviewing funding needs for its U.S. and UK pension funds, both of which had deficits. It did not specify how large the UK deficit was.

A Philips spokesman on Tuesday declined to elaborate on the size of the deficit or say whether the NXP deal would fully cover the shortfall. He said the company would provide a comprehensive update on its pension funds in December.

NXP was created in 2006 when a private equity consortium bought Philips' chipmaking unit. The company listed on the stock market in New York last month in an initial public offering that raised less money than planned.