Blackstone and Onex Team Up to Bid for Philips Lighting

Mar 04, 2016

The business could be worth between €4.5 billion and €5 billion

Blackstone Group LP and Onex Corp. have teamed up to bid for the lighting unit of Royal Philips NV, according to people familiar with the situation. The business could be worth between €4.5 billion ($4.9 billion) and €5 billion, one of the people said.

The two North American private-equity firms are competing with New York-based rival Apollo Global Management LLC and U.K. investment company Melrose Industries PLC. They are teaming up to share the large equity commitment that a successful bid would require and to pool expertise on how to improve performance of the unit, one person said. They would also arrange loans to pay for part of the purchase price.

The lighting unit that Blackstone and Onex are bidding for had €7.4 billion of sales last year. The unit includes Philips’ traditional lamps operation as well as a business that makes lamps with energy-efficient light-emitting diodes, or LEDs. Demand for traditional lamps is declining as LEDs become more popular. The unit also makes light fittings, known as luminaires, and provides lighting systems for homes, offices and cities.

“Philips is reviewing all strategic options for Philips Lighting, including an initial public offering and a private sale,” Philips spokesman Steve Klink wrote in an email. “Philips is on track to be able to announce the separation of the Lighting business in the first half of 2016.”

In January, Philips terminated a planned $2.8 billion sale of most of its Lumileds unit, which makes components for LEDs, to a Chinese investor, after the Committee on Foreign Investment in the U.S. blocked the deal on national-security grounds.

Source: wsj.com