NEW YORK (TheStreet) -- Philips (PHG) - Get Report announced this morning that it has agreed to sell an 80% stake in its lighting components business for $2.8 billion to GO Scale Capital, a technology fund that will work to expand Philips LED and automotive businesses.

The deal is expected to be completed in the third quarter of 2015.

After the transaction the new company will  be called Lumileds and continue to act as a supplier to Philips.

"Philips is very positive about this transaction with GO Scale Capital as its principals are long-term, growth-oriented investors with a track record of building and expanding technology companies," CEO of Royal Philips Frans van Houten said in a statement.

"We have significantly improved the performance of the LED components business and optimized the industrial footprint in the automotive lighting business over the last few years, and established a strong management team and innovation pipeline. We are therefore convinced that together with GO Scale Capital, Lumileds can grow further, attract more customers and increase scale as a stand-alone company," van Houten added.

Shares of Philips closed at $28.77 on Monday afternoon.

Separately, TheStreet Ratings team rates KONINKLIJKE PHILIPS NV as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KONINKLIJKE PHILIPS NV (PHG) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
• 44.83% is the gross profit margin for KONINKLIJKE PHILIPS NV which we consider to be strong. Regardless of PHG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PHG's net profit margin of 2.15% is significantly lower than the industry average.
• Net operating cash flow has decreased to $956.24 million or 24.81% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Industrial Conglomerates industry and the overall market, KONINKLIJKE PHILIPS NV's return on equity significantly trails that of both the industry average and the S&P 500.
• You can view the full analysis from the report here: PHG Ratings Report