Dutch electronics giant Royal Philips NV yesterday announced the sale of a majority stake in its Lumileds LED lighting business for US$1.5 billion after canceling a spinoff earlier this year over US regulatory concerns.
“Royal Philips today announced that it has signed an agreement to sell an 80.1 percent interest in Lumileds to certain funds managed by affiliates of [US-based] Apollo Global Management,” the Amsterdam-based company said in a statement.
Philips said it expected the deal to net the firm approximately US$1.5 billion in cash and equity.
The new move comes after Philips dropped a planned US$2.8 billion sale to GO Scale Capital, which was mainly backed by GSR Ventures (金沙江創投), in January when neither company could convince the US Committee on Foreign Investment (CFIUS) to clear the deal.
“With this transaction, we will be completing an important phase of the transformation of our portfolio and I am satisfied that in the Apollo managed funds we have found the right owner for Lumileds,” Philips chief executive Frans van Houten said.
Describing the loss of the earlier GO Scale deal as a “setback,” Van Houten told reporters: “We are confident that this time we will succeed.”
Van Houten said that “given the backdrop of the CFIUS outcome, we had to look for a buyer in a considerably smaller landscape of potential buyers.”
“Therefore the premium of the previous process could not be replicated this time,” he told reporters.
The transaction is expected to be completed in the first half of next year, subject to regulatory approvals.
Van Houten said that by retaining a 19.9 minority stake, Philips had access to so-called preferred equity shares, meaning the Dutch company would receive additional income “if Lumileds performs well.”
Philips in 2014 announced it would split in two, separating its healthcare-lifestyle arm from its historic lighting section in a move to streamline its operations.
Lumileds, which makes LED and car lighting components, has operations in more than 30 nations and employs about 8,800 people, including at its research and development and production facilities in California’s Silicon Valley.
Philips has for the past dozen years focused on medical equipment, which now accounts for more than 40 percent of sales.
“We look forward to partnering with Philips ... and Lumileds, and bringing in Apollo’s resources to support the continued growth and innovation of this industry-leading business,” Apollo senior partner Robert Seminara said.
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