Philips Sale of Lumileds to Go Scale Capital Fails U.S. Regulatory Approval

Royal Philips (Philips) of Amsterdam, the Netherlands announced that the company and Chinese investment firm GO Scale Capital have terminated the agreement for GO Scale Capital to acquire an 80.1% interest in Lumileds. Last year Philips agreed to the sale of the Lumileds business, which produces LEDs and automotive lighting.

Philips noted that Committee on Foreign Investment in the U.S. did not grant clearance for the acquisition by Go Scale Capital. The committee’s authority is to rule on foreign investment into U.S. businesses. Philips subsidiary Lumileds is headquartered in San Jose, California. Insiders have speculated that the committee’s security concerns were related to the transfer of semiconductor technology for producing high-efficiency LEDs to a Chinese company.

In addition to producing LEDs, Lumileds is reportedly the biggest supplier of lamps to the automotive industry. Lumileds says it supplies the lamps for about one out of every three cars worldwide.
Royal Philips created the stand-alone company that combined its LED production and automotive lighting businesses in 2014.

Other companies have expressed interest in purchasing Lumileds including KKR & Co, CVC Capital Partners, and Bain Capital. These companies unsuccessfully bid for Lumileds in March.

Philips is also looking into selling its lighting division. Investment firms CVC, which has partnered with KKR, Bain Capital, and Blackstone Group LP have expressed interest in buying the lighting division, which is separate from the LED production and automotive lighting of Philips subsidiary Lumileds.

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