(Updates with details throughout)
BERLIN, Oct 4 (Reuters) - German engineering firm Siemens is selling its remaining 17 percent stake in Osram Licht to institutional investors, severing links with the lighting group.
Osram, listed by Siemens in July 2013, clashed last year with its biggest shareholder and former parent company over its new strategy of expanding in the general LED lighting market.
Siemens said in a statement on Wednesday that net proceeds from the sale will be used for general corporate purposes, adding it would retain a small number of Osram shares to service a Siemens bond plus warrant issue due in 2019.
Osram shares closed at 67.06 euros, meaning that Siemens' 18.155 million shares are worth more than 1.2 billion euros ($1.4 billion).
Siemens is telling investors to expect a discount of up to 3 percent to the closing market price on the sale, a source close to the matter said on Wednesday.
Osram thanked Siemens for its role as a core shareholder over the years since its listing. The company has been the subject of repeated takeover speculation, including by Chinese investors.
Osram is a market leader in automotive lighting and is developing new products including smart LED headlights and special laser diodes needed for sensors in self-driving cars.
Last year, a magazine reported that German automotive components group Continental tried to buy Siemens stake in Osram, but was turned down.
Sanan Optoelectronics and venture capital firm GSR Go Scale had pursued a bid for Osram but walked away amid signs of political opposition to Chinese acquisitions in Germany, sources told Reuters last December.
Osram agreed last July to sell its biggest unit, now renamed LEDvance with 2 billion euros in sales and 8,800 staff, to IDG Capital Partners, Chinese lighting company MLS Co and financial investor Yiwu State-Owned Assets Operation Center.
Citi and Deutsche Bank are running the stake sale, financial sources said. ($1 = 0.8502 euros) (Reporting by Emma Thomasson, Arno Schuetze and Alexander Huebner; editing by Alexander Smith)