Amsterdam, the Netherlands – Royal Philips (NYSE: PHG, AEX: PHIA) today announced that it will be initiating a share buyback program for an amount of up to EUR 1.5 billion. At the current share price, the buyback program represents a total of approximately 46.1 million shares. Philips plans to start the program in the third quarter of 2017, and complete it in two years. As the program will be initiated for capital reduction purposes, Philips intends to cancel all of the shares acquired under the program.

“Our capital allocation policy aims for a balanced mix of investments in organic and inorganic growth opportunities, actions to drive balance sheet efficiency and returns to shareholders,” said Frans van Houten, CEO of Royal Philips. “Today, we announced the acquisition of Spectranetics to drive inorganic growth and increase profitability. We intend to finance this acquisition through a combination of cash on hand and the issuance of debt. Furthermore, we are announcing a EUR 1.5 billion share buyback program. This program is intended to - more than - offset the share dilution in connection with Philips’ long term incentive programs and dividend in shares. We have made good progress with selling down our interest in Philips Lighting after its successful IPO, and we expect to complete the Lumileds transaction this week. As part of our pension de-risking strategy, we plan to make a contribution of USD 250 million to our US pension fund in the third quarter of 2017 to reduce its deficit, which will further reduce Philips’ interest costs going forward.”

The completion of the sale of an 80.1% interest in Lumileds to certain funds managed by affiliates of Apollo Global Management, LLC (NYSE: APO) is on track. At this moment, all closing conditions have been fulfilled and the completion of the transaction is expected on June 30, 2017.