Royal Philips has announced that it has signed an agreement to sell an 80.1 percent interest in LED and lighting company Lumileds, to US private equity firm Apollo Global Management. Philips will retain the remaining 19.9 percent interest in Lumileds.
In January, Philips abandoned a deal to sell Lumileds to a consortium of Chinese investors (GO Scale Capital) for $2.8 billion, due to regulatory concerns.
Lumileds is the biggest supplier of lamps to the automotive industry, equipping one out of every three cars in the world.
The transaction values Lumileds at an enterprise value of approximately $2 billion, including debt and debt-like items. Philips expects to receive cash proceeds, before tax and transaction-related costs, of approximately $1.5 billion and participating preferred equity. The transaction is expected to be completed in the first half of 2017, subject to usual closing conditions and regulatory approvals.
"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," said Frans van Houten, CEO of Royal Philips.
"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."
"We are extremely excited about the opportunity for our managed funds to acquire Lumileds," said Robert Seminara, senior partner at Apollo. "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 of this industry-leading business."
"I am convinced that together with the Apollo managed funds, Lumileds will sharpen its focus and accelerate innovation in its leading product portfolio of lighting components," said Pierre-Yves Lesaicherre, CEO of Lumileds. "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 in an exciting industry."
Apollo is an alternative US investment manager with assets under management of approximately $189 billion in private equity, credit and real estate funds, invested across a group of nine industries. Apollo managed funds have a successful track record of acquiring and growing businesses in partnership models of co-ownership with former parent companies, according to Philips.