Philips to Sell Majority Stake in Lumileds to Apollo for $1.5 Billion
December 12 2016 - 7:30AM
Dow Jones News
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 07:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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