PHG Koninklijke Philips NV

By Maarten van Tartwijk 

AMSTERDAM--Royal Philips NV on Monday said it had agreed to sell a controlling stake in its Lumileds lighting business to private-equity firm Apollo Global Management LLC for about $1.5 billion after a previous deal with a Chinese investor was blocked by U.S. regulators.

The Dutch health-technology company said it would sell an 80.1% stake in Lumileds, a maker of LED components and automotive lighting products, in a deal that values the business at $2 billion. Philips will keep the remaining stake for at least three years, after which it can dispose of the holding.

The deal comes less than a year after Philips was forced to terminate a planned sale of most of Lumileds to a Chinese investment group after it was rejected by the Committee of Foreign Investment in the U.S., or CFIUS.

The committee, which vets global deals on national-security grounds, raised undisclosed concerns about the deal, which valued Lumileds at as much as $3.3 billion at the time. The move was the latest example of heightened security concerns over a high-tech shopping spree by Chinese companies.

Philips Chief Executive Frans van Houten said the number of potential buyers became "considerably smaller" after CFIUS blocked the deal, resulting in a lower transaction price. CFIUS is unlikely to raise concerns again as Apollo is based in the U.S., he added.

For the New York private-equity firm, the transaction marks the latest in a year of prolific deal-making despite high-price markets and intense competition from corporate buyers. The firm expects to spend more in 2016 than it ever has in a single year, co-founder Josh Harris said on a call with analysts in October.

Lumileds, which is based in the Netherlands, generated sales of about $2 billion last year. It has around 9,000 employees world-wide, with operations in more than 30 countries, including a large research-and-development facility in San Jose, Calif.

For Philips, the sale marks another step in its efforts to divest its 125-year-old lighting operations in an attempt to concentrate on selling health-care technology products. Earlier this year it sold a minority stake in its general lighting business through an initial public offering and intends to fully exit the business in the coming years.

Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com

(END) Dow Jones Newswires

December 12, 2016 06:44 ET (11:44 GMT)

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