Philips terminates $3.3-bn Lumileds sale to Chinese PE firm on US regulatory concern

Dutch electronics group Royal Philips NV yesterday said that it has terminated its proposed $3.3-billion sale of its Lumileds business to Chinese private equity firm Go Scale Capital, after the Committee on Foreign Investment in the US (CFIUS)  blocked the deal on national-security grounds.

Lumileds, which operates in more than 30 countries and employs around 8,800 people worldwide, said that the termination of the transaction does not involve a break fee nor impact the separation process of the remaining Lighting business from Royal Philips.

The Dutch company had announced in March that it would sell 80.1-per cent stake in its Lumileds business while retaining a 19.9 per cent stake for now.

Without elaborating, the Amsterdam-based company had in October said that CFIUS had expressed "certain unforeseen concerns" about the deal. (See: Philips $3.3-bn sale of Lumileds stumbles on US regulatory concerns)

Philips had said in June 2014 that it would merge its Lumileds LED components and automotive lighting divisions into a standalone subsidiary which could potentially be spun off.

Lumileds manufactures high-powered LED lights, while the automotive lighting division sells light sources to car makers and auto parts and repair stores.

Lumileds generated sales of approximately $2 billion in 2015.

Despite the extensive efforts of Philips and GO Scale Capital to mitigate the concerns of the Committee on Foreign Investment in the United States (CFIUS), regulatory clearance has not been granted for this particular transaction.

''I am very disappointed about this outcome as this was a very good deal for both Lumileds and the GO Scale Capital-led consortium. This outcome does not, however, impact the fundamentals of the Lumileds business,'' said Frans van Houten, CEO of Royal Philips.

''Lumileds is a highly successful supplier of lighting components to the general illumination, automotive and consumer electronics markets with a strong customer base. We will now engage with other parties that have expressed an interest in exploring strategic options for Lumileds to pursue more growth and scale,'' he added.