Osram supports public takeover offer of €35 per share from Bain Capital and Carlyle Group

The managing board and supervisory board of OSRAM Licht AG have decided to support a legally binding public takeover offer from a bidding consortium composed of Bain Capital and The Carlyle Group.

Osram and the consortium have also signed an investor agreement that includes comprehensive commitments. “Bain and Carlyle are the right partners for Osram at the right time,” says Osram’s CEO Olaf Berlien. “They support our strategy and facilitate growth,” he adds. “Both are committed to our employees and offer shareholders an attractive premium.”

As part of the public takeover offer, shareholders are to be offered €35 per share in cash. This is a premium of about 21% above the last closing price of the shares before the publication of Osram’s ad-hoc announcement regarding the evaluation of a legally binding transaction offer by Bain and Carlyle, and a premium of 22.6% on the volume-weighted average price of Osram shares in the past three months. In both cases, talks with Bain and Carlyle have been public knowledge for some time and therefore had an effect on the share price.

The offer values Osram at an equity value of €3.4bn and an enterprise value of about €4bn. Bain and Carlyle have announced a minimum acceptance threshold of 70% (not including the shares owned by Osram Licht AG itself). The offer period is expected to end at the beginning of September. Both Osram’s managing board and supervisory board assume that they will recommend in their reasoned response that shareholders should accept the offer. The managing board intends to sell its own Osram shares to the bidders as part of the takeover.

Osram says that its ongoing transformation to a high-tech photonics company is in response to a profound change in the lighting industry. In the event of a successful takeover offer, Osram reckons that it will have an ownership structure that will enable it to continue its necessary transformation more effectively in the current economically and geopolitically uncertain times. Both private equity firms have extensive experience in supporting companies through transformation processes, have access to an international network, and have successfully developed several companies in the past. “We welcome the offer from Bain and Carlyle and are convinced that it represents both a fair value for the shareholders and strategic added value for our company,” comments supervisory board chairman Peter Bauer.

In connection with the investor agreement, Bain and Carlyle will support the current growth path and, among other things, are making extensive commitments regarding employees and locations. For example, the investors are committed to the existing management plan and strategy with its focus on optical semiconductors, the automotive sector and digital applications. Bain and Carlyle have given assurance that they will fully support the management team and will collaborate closely with the current managing board to further Osram’s transformation. After the takeover, the firm will continue to operate under the existing name, the corporate headquarters will remain in Munich, and the rights to all patents will remain with Osram. Also, the investor agreement acknowledges that Osram operates in a challenging and volatile market environment that requires flexible action.

Both investors will support all ongoing growth projects, possible acquisitions as well as investments in new product developments. They also confirm that existing labor agreements, collective bargaining agreements and similar agreements as well as existing pension plans will remain unchanged. The existing steering committee dealing with labor issues (with equal representation between the managing board and the workforce representatives) will also remain in its present form. The investors are explicitly committed to the cornerstones laid out in the document ‘Future Concept Germany’ that was agreed in July 2017 with the trade union IG Metall and the workforce. In addition, the locations of the essential business units will remain unchanged.

In accordance with the requirements of the German Securities Acquisition and Takeover Law, the offer document will be published at a later time by Luz (C-BC) Bidco GmbH, a holding company jointly controlled by investment funds advised and/or connected with Bain Capital Private Equity and The Carlyle Group, following approval by the German Federal Financial Supervisory Authority. After publication, the managing board and supervisory board will review the document in accordance with their legal obligations and submit a reasoned response.

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