According to a Royal Philips announcement, a consortium led by GO Scale Capital has agreed to purchase 80.1% of the combined LED components and automotive lighting business from Royal Philips. Philips will retain the remaining 19.9% and will receive about USD $2.8 billion in compensation for the transaction before taxes and transaction costs. Philips expects to get an additional differed contingent payment of USD $100 million. Completion of the transaction is scheduled for the third quarter of 2015, subject to regulatory approvals and certain closing conditions.
The new company will keep the name Lumileds. The CEO of Philips’ Lighting Solutions business Pierre-Yves Lesaicherre will head the company. Philips’ Lighting Solutions business will continue operation and will remain an important customer of Lumileds. Lumileds will continue to act as a supply partner for Philips’ Lighting Solutions business.
“Philips is very positive about this transaction with GO Scale Capital as its principals are long-term, growth-oriented investors with a track record of building and expanding technology companies,“ said Frans van Houten, CEO of Royal Philips. “We have significantly improved the performance of the LED components business and optimized the industrial footprint in the Automotive lighting business over the last few years, and established a strong management team and innovation pipeline. We are therefore convinced that together with GO Scale Capital, Lumileds can grow further, attract more customers and increase scale as a stand-alone company.”
Oak Investment Partners and GSR Ventures have sponsored the new investment fund GO Scale Capital. The consortium partners are GSR Capital, Asia Pacific Resource Development, and Nanchang Industrial Group. The GO Scale Capital team reportedly has a track record in scaling up disruptive technologies. The consortium partners have access to complementary technologies and manufacturing capacity through their past LED industry investments.
Sonny Wu, chairman of GO Scale Capital and co-founder and managing director of GSR Ventures, who will serve as interim chairman of Lumileds following the transaction’s completion stated, “The Lumileds acquisition will be a perfect example of how GO Scale turns cutting edge technologies into world class companies. GO Scale Capital will focus on expanding Lumileds’ opportunities by investing in its global centers of operation and in the fast growing general lighting and automotive industries. Through Lumileds’ world-leading technology in key verticals such as LED chips, LED mobile flash and automotive lighting, together with a customer base including the likes of BMW, Volkswagen and Audi, we expect to see significant growth and unparalleled inroads into new opportunities such as electric vehicles.”
“I am convinced that together with the new investors led by GO Scale Capital, Lumileds will extend its leading product portfolio of lighting components and continue to achieve robust growth,” said Pierre-Yves Lesaicherre, CEO of Lumileds. “With our strong technology leadership, we are ready to address the future needs of our customers. We will work closely with our industry partners and customers to lead innovation and the transformation of our industry.”
As announced in September 2014, Philips has started the process of creating two companies focused on Lighting Solutions and HealthTech. Philips plans to transition the Lighting Solutions business into a separate legal structure. Currently, Philips intends to separate the two businesses through an initial public offering, although Philips will continue to review other options.