25 January 2016

Philips' sale of Lumileds to China-focused GO Scale Capital-led consortium thwarted by CFIUS clearance

Royal Philips NV of Amsterdam, The Netherlands (the world's largest lighting producer) and GO Scale Capital (an investment fund sponsored by China-based GSR Ventures and US-based Oak Investment Partners) have terminated the agreement for the consortium led by GO Scale Capital to acquire an 80.1% interest in its California-based LED-making division Lumileds (with Philips retaining the remaining 19.9%).

Despite efforts to mitigate the concerns of the Committee on Foreign Investment in the United States (CFIUS), regulatory clearance has not been granted for the transaction. GSR Ventures has existing investments in China-based Lattice Power (one of the few firms to manufacture gallium nitride based LEDs on silicon substrates rather than on sapphire or silicon carbide). The GO Scale Capital-led consortium partners also include Hong Kong-based Asia Pacific Resource Development Investment Ltd (APRD) and Nanchang Industrial Holding Group of Jiangxi Province in south-eastern China.

"This was a very good deal for both Lumileds and the GO Scale Capital-led consortium. This outcome does not, however, impact the fundamentals of the Lumileds business," comments Philips' CEO Frans van Houten. "Lumileds is a highly successful supplier of lighting components to the general illumination, automotive and consumer electronics markets with a strong customer base. We will now engage with other parties that have expressed an interest in exploring strategic options for Lumileds to pursue more growth and scale," he adds. "I would like to extend my appreciation to GO Scale Capital for having been a deeply committed partner to Philips during the transaction process."

With about 8800 staff in more than 30 countries, Lumileds supplies lighting components to the general illumination, automotive and consumer electronics markets, and generated revenue of about $2bn in 2015. The transaction valued the business at about $3.3bn.

The termination of the transaction with GO Scale Capital does not involve a break fee nor impact the separation process of the remaining Lighting business from Royal Philips, which is being pursued as an independent transaction. Philips will continue to report the Lumileds business as discontinued operations.

See related items:

Philips selling 80.1% of LED components and Automotive lighting business to GO Scale Capital for $3.3bn

Philips Lighting to spin off Lumileds and Automotive lighting businesses as stand-alone components firm

Tags: Lumileds

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