Dec 13, 2016: The sell of Lumileds came through after a delay of almost a year. The delay was due to national security concerns raised by the Committee on Foreign Investment in the United States (CFIUs) in January 2016.
According to Roger Chu, Director of Research Department, LEDinside, the acquisition of Lumileds by Apollo Global Management will directly impact Philips Lighting’s IPO. “By spinning off Lumileds, Philips Lighting can use the cash from the sales to support Philips Lighting’s IPO issuance, thus separating its lighting system and luminaire business from its LED component and automotive lighting. This strategy could generate higher profits and better sales price,” Chu said.
Accoring to LEDinside, the sale of Lumileds to Apollo Global Management, a US investor, will change how Philips’ rivals like Osram and Cree will compete with other.
Due to stiff competition from Chinese manufacturers, Lumileds was forced to outsource most of its LED chip and component production to Korean, Taiwanese and Japanese manufacturers at lower costs. “We forecast more Asian companies will approach Lumileds for future OEM or technology partnerships, hence generating new revenues for the San Jose-based LED business and its investors,” Chu said.
Earlier, Chinese investor Go Scale Capital had offered US $3.3 billion for Lumileds, but due to US government’s intervention the acquisition could not materialise. CFIUS had blocked the acquisition citing confidential national security concerns. Hence, it took Philips one year to find a new buyer.