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12 December 2016

Philips to sell majority stake in Lumileds to US private equity firm Apollo

The world's largest lighting producer Royal Philips NV of Amsterdam, The Netherlands has agreed to sell an 80.1% stake in its California-based LED component and automotive lighting company Lumileds to certain funds managed by affiliates of Apollo Global Management LLC. Philips will retain the remaining 19.9% interest in Lumileds for a minimum of three years following completion of the transaction.

With operations in more than 30 countries and about 9000 staff worldwide, Lumileds manufactures LED-based lighting components for the general illumination, automotive and consumer electronics markets, generating sales of about $2bn in 2015.

The deal values Lumileds at about $2bn. Philips expects to receive cash proceeds (before tax and transaction-related costs) of about $1.5bn and participating preferred equity (entitling it to an incremental share of future value creation, depending on the achievement of certain returns by Apollo managed funds). The transaction is expected to be completed in first-half 2017, subject to customary closing conditions (including the relevant regulatory approvals).

Previously, in January, Philips terminated an agreement to sell an 80.1% stake in Lumileds to a consortium led by GO Scale Capital (an investment fund sponsored by China-based GSR Ventures and US-based Oak Investment Partners) in a deal that valued Lumileds at about $3.3bn. This was after US regulatory clearance was thwarted by concerns of the Committee on Foreign Investment in the United States (CFIUS), as GSR Ventures had 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).

"With this transaction, we will be completing an important phase of the transformation of our portfolio and I am satisfied that in the Apollo-managed funds we have found the right owner for Lumileds," says Philips' CEO Frans van Houten. "In line with our strategic focus on health technology, Lumileds has been operating as a standalone company within Philips since early 2015. With Apollo managed funds acquiring a majority interest in Lumileds and partnering with Philips, Lumileds is now well-positioned for further growth and value creation, building on its robust innovation pipeline, technology leadership and strong customer base," he adds.

Apollo is a global alternative investment manager with assets under management of about $189bn in private equity, credit and real-estate funds, invested across a core group of nine industries. Apollo-managed funds have a track record of acquiring and growing businesses in partnership models of co-ownership with former parent companies, Philips says.

"We look forward to partnering with Philips and the outstanding management team and employee base at Lumileds, and bringing in Apollo's resources to support the continued growth and innovation," says Apollo senior partner Robert Seminara.  

"Together with the Apollo-managed funds, Lumileds will sharpen its focus and accelerate innovation in its leading product portfolio of lighting components," says Lumileds' CEO Pierre-Yves Lesaicherre. "With our strong R&D programs and intellectual property, we are ready to address the current and future needs of our customers. Lumileds will work closely with its industry partners and customers and capture growth opportunities," he adds.

See related items:

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

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

Visit: www.lumileds.com

Visit: www.lighting.philips.com

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