PE firms bid for Philips lighting business

Dutch electronics group Philips has attracted bids from several private equity firms for the majority of its lighting components business, Reuters yesterday reported, citing several unnamed sources.

Bain Capital, CVC, CD&R, KKR & Co and Onex made indicative offers earlier this week, valuing the business at between €2.5 billion ($3.1 billion) and €3 billion, the report said.

Philips had announced last month that it plans to split the company into two, separating its healthcare-lifestyle and lighting businesses after it stripped off less profitable activities. (See: Philips to split company in two)

The Amsterdam-based company had added that details of how its lighting business would be split into a separate legal structure would be announced in 2015. 

Philips has been seeking third-party investors for its lighting business but may opt to hold a minority stake in the business.

Philips has been a household name for around a century but in recent years it had stripped down its business to focus on lighting technology and on medical technology where margins were strong and competition from emerging markets limited.

The company last year announced the sale of its lifestyle entertainment segment, which makes stereos and DVD players, after it sold its troubled TV-making arm in 2012.

Its lighting business, which notched up €7 billion in sales last year, employs 47,900 people worldwide.

Philips Lighting spans the entire lighting value chain – from light sources, luminaires, electronics and controls to full applications and solutions – through Light Sources & Electronics, Consumer Luminaires, Professional Lighting Solutions, Automotive Lighting, and Lumileds.

In June, the company said it planned to merge its Lumileds LED components and automotive lighting divisions into a standalone subsidiary which could potentially be spun off.

Philips chief executive Frans van Houten, a veteran known for his turnaround prowess, last year pledged to extend his efficiency drive to bolster profitability.

The CEO is looking to achieve 2016 goals including a compound annual growth rate for comparable sales of 4 per cent to 6 per cent, with a profit margin of 11 per cent to 12 per cent.