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 The deal announced on Tuesday is a prelude to an even bigger
strategic move for Philips: spinning off its main lighting division,
the world’s largest lighting maker, via a stock market flotation, as
the Dutch group focuses on medical technology and selected consumer
products.
Philips said the deal values the components business, which
comprises an automotive lighting unit and the "Lumileds" LED
manufacturing business, at $3.3 billion including debt.
ABN Amro analyst Marc Hesselink said the sale price was
"considerably above market expectations". The unit made a profit of
141 million euros on sales of 1.42 billion in 2014.
Go Capital was advised by London-based Zaoui & Co, while Philips was
advised by Morgan Stanley.
Philips shares, which had hit a 14-month high of 27.675 euros
earlier this month, eased 0.4 percent to 26.53 euros by 0952 GMT.
Go Scale, which beat off competition from private equity firms to
seal the deal, has previously invested in Boston Power, a U.S.-based
manufacturer of electric vehicle batteries, and Xin Da Yang, a Eco-EV
company in China.
It said it plans to expand the business, building on Philips'
customer base which includes the likes of Volkswagen <VOWG_p.DE>,
BMW <BMWG.DE> and Audi.
"We expect to see significant growth and unparalleled inroads into
new opportunities such as electric vehicles,” Go Scale chairman
Sonny Wu said.
Go Scale is funded by GSR Ventures, with offices in Hong Kong,
Beijing and Silicon Valley, and by Oak Investment Partners.
Consortium partners include Asia Pacific Resource Development,
Nanchang Industrial Group and GSR Capital.
"There were other bidders, also good bidders, perhaps with fewer
connections in the industry of semiconductors and the ability to
help in building out scale," Philips CEO Frans van Houten told
reporters.
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Reuters had reported that rival bidding groups led by private equity
firms CVC-KKR and Bain Capital had been vying for Lumileds until the
Asian-oriented group entered the bidding in mid-March.
LEDs, or light-emitting diodes, are semiconductor devices that emit
light when an electric current passes through them.
Although their use has boomed in recent years, the industry has
suffered from overcapacity and price erosion. Philips has said its
LED business has operating margins above 10 percent after a 2012
restructuring under Pierre-Yves Lesaicherre, but needs further
investment to improve scale.
Philips said it wanted to sell the subsidiary, which will be called
"Lumileds," because so many of its customers compete with Philips
itself. Approximately 20 percent of component sales are to Philips'
own main lighting business.
(Editing by Jason Neely and David Holmes)
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