Philips Sells Lighting Business to Consortium--Update

By WSJ Staff 

Koninklijke Philips NV has sold a majority stake in its light-emitting diode components and automotive-lighting activities to a private-equity consortium in a deal that values the business at about $3.3 billion.

The transaction is part of a long-running overhaul of the Dutch electronic-equipment group's business.

Philips said earlier this month it plans to spin off the rest of its lighting business through an initial public offering next year. Once that happens, the group's will have two main businesses: medical equipment, such as hospital scanners, and consumer-lifestyle products, including coffee machines and shavers.

GO Scale Capital, an investment fund sponsored by GSR Ventures and Oak Investment Partners, said it would buy an 80.1% stake in the Philips LED components and automotive-lighting business in a deal which is expected to be completed in the third quarter of 2015. Philips would retain a 19.9% interest in the business.

The deal includes the transfer of a patent portfolio of more than 600 patent families related to LED manufacturing and automotive lighting, GO Scale Capital said.

Sales of the combined businesses were around EUR1.4 billion ($1.9 billion) in 2013, or about 17% of Philips's total lighting sales.

They primarily manufacture LED components used in products ranging from televisions and smart phones to traffic lights as well as automobiles.

Philips' decision to shed its lighting businesses in one form or another echoe the move by German engineering group Siemens AG which last year listed Osram Licht AG, its lighting business, having previously separated it from the main group. Philips Lighting and Osram compete with the lighting division of General Electric Co.

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