Philips to sell US$3.3 billion in lighting assets

Royal Philips (NYSE: PHG, AEX: PHIA) has announced it has signed an agreement with a consortium, led by GO Scale Capital, to sell off an 80.1% interest in Philips’ combined LED components and Automotive lighting business.

The transaction has an enterprise value of around US$3.3 billion.

Following the finalisation of the business deal later in the year, the new company will continue under the Philips-owned business name, Lumileds, while Philips’ Lighting Solutions business will retain 19.9% share, as well as a 34% interest in the Lumileds US operations.

“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,” said Frans van Houten, CEO of Royal Philips.

“We have significantly improved the performance of the LED components business and optimised 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.”

GO Scale Capital is a new investment fund sponsored by GSR Ventures and Oak Investment Partners. The consortium partners are Asia Pacific Resource Development, Nanchang Industrial Group and GSR Capital.

The managing director of GSR Ventures and chairman of GO Scale Capital, Sonny Wu, said their focus into the future will be on innovation and expansion.

“GO Scale Capital will focus on expanding Lumileds’ opportunities by investing in its global centres of operation and in the fast-growing general lighting and automotive industries,” he said.

“We expect to see significant growth and unparalleled inroads into new opportunities such as electric vehicles.”

Lumileds is a leading supplier of lighting components to the general illumination, automotive and consumer electronics markets with operations in more than 30 countries worldwide. In 2014, it generated sales of approximately US$2 billion.

Photo credit: ©Philips/Philips Light Gallery (21)