Philips/Osram two giants sell lighting business Chinese buyers have strong bidding

According to sources, the world's two major lighting giants, Philips and Osram, will accept quotations this week and sell their lighting business. Buyers from all over the world have already started queuing, and potential buyers are mainly from China.

In July last year, Feile Audio became the first company to express its intention to acquire Osram Lighting. Since then, Mu Linsen has also “high-profile show” Osram, and other domestic listed companies with potential bidding intentions are quite low-key. The same platform also includes international top private equity investment groups, such as KKR, CVC, Bain Capital, Blackstone Group and so on.

Despite the fact that the same competitors are not small, Barclays analysts are resolutely optimistic about Chinese bidders, and pointed out 16 domestic listed companies and IPO queuing companies that may bid for OSRAM lighting business, including and OSRAM Foshan lighting with deep roots.

Domestic and foreign capital group bidding

On the one hand, the two largest international lighting giants want to sell assets, and on the other hand, many of the world's top companies are queuing for bidding. This asset transfer will not be irritating.

Following the agreement in March last year to sell 80.1% of Lumileds, a lighting equipment manufacturing company, to a Chinese consortium, Philips plans to continue to spin off its lighting business, although it has not yet decided whether to split the lighting business or sell it directly. However, according to the latest news from Reuters, Philips has begun to accept initial quotations, and the lighting business to be sold is estimated to be about 4 billion to 6 billion euros.

It is understood that the acquisition consortium composed of KKR Group, private equity fund company CVC, Canada Onex may participate in the bidding for Philips' lighting business. Other private equity companies participating in the bidding include Bain Capital, Apollo Global Management Company, Blackstone Group. And Chinese buyers.

Bloomberg Businessweek quoted dissidents as saying that large private equity firms offer Philips' lighting assets roughly €5.5 billion.

On the other hand, Germany's Osram, the world's second-largest lighting giant after Philips, also launched a preliminary offer for its traditional lighting business last week. According to sources, bidders' valuation of the business is roughly 500 million euros.

International investment banks are optimistic about Chinese companies

Compared to Philips, domestic buyers seem to be more interested in the OSRAM lighting business. Since Osram announced plans to spin off its channel business in April last year, the company has expressed its intention to bid for the Feile Audio and Mulinsen announcements, but most potential bidding companies remain low-key.

Mulinsen, who only landed in the A-share market in February last year, was the most high-profile in this bidding. The general manager of the company, Lin Jiliang, once "high-profile show of love": "Mulinsen has the ability to complement the Osram with its packaging economy and lighting manufacturing capabilities." However, when the Securities Times and Lianhua Finance reporter asked about the latest developments in the company's bidding, the company said that the announcement should prevail, and the company's progress will be announced in a timely manner.

In July last year, Feile Audio had issued a non-binding letter to OSRAM to acquire its channel business. However, Reuters recently quoted sources as saying that Feile Audio has withdrawn from bidding for OSRAM lighting business. In this regard, Feile Audio said that this statement is not accurate. As OSRAM sells its lighting business line for a long time, the business split has not been completed, and the company's board of directors will make arrangements for the follow-up work according to the progress.

It is worth mentioning that in early December last year, Feile Audio announced that it intends to acquire HML's 80% shares and 80% of Exim's shares in cash for a total of 149 million euros, and obtain the world's leading lighting brand Xi Wannian and its sales channels. And production base.

Compared with the two companies mentioned above, “Daily Runda’s potential buyer’s identity is also torn off by a letter of inquiry from the Shenzhen Stock Exchange. In November 2015, the Shenzhen Stock Exchange issued a letter of inquiry on the specific progress of the planning of overseas assets acquisition during the suspension of the Dehao Runda. The company stated in its reply that it intends to cooperate with the state-level industrial fund to jointly acquire the assets of a lighting enterprise outside the country. Before the company's stock was suspended, it has had several contacts with the seller of the lighting assets, and has reached an intention to cooperate with a state-level industrial fund. The company expects to complete the non-binding offer letter and assets to the end of December. The seller is formally submitted.

According to the suspension announcement of Dehao Runda in August last year, the acquisition amount of the assets of the overseas lighting enterprise was between RMB 4 billion and RMB 6 billion, which is exactly the same as the valuation of the OSRAM lighting business. However, in the face of the Securities Times and Lotus Finance reporters on the latest developments, Dehao Runda still said that it is inconvenient to disclose, subject to the announcement.

Foshan Lighting is the most optimistic

According to Reuters, Foshan Lighting will join forces with Bain Capital to bid for Osram's business. In this regard, the Securities Times·Lotus Finance reporter verified to the company, the other party refused to answer the meeting with the relevant responsible person in the meeting.

Analysts at Barclays Bank believe that many Chinese companies have the financial strength of mergers and acquisitions. Considering the attractiveness of European brands and channels in China, they believe that Chinese companies are most likely to take the lead in this bid. The Barclays Bank report lists 16 potential Chinese listed companies or IPO queuing companies that may compete for OSRAM lighting business, including Foshan Lighting, Mulinsen, Feile Audio, Changfang Lighting, Sanan Optoelectronics, Liard, Hong Lee Optoelectronics, Jufei Optoelectronics, etc. Among them, Osram Holdings Co., Ltd. sits firmly on the seat of the largest shareholder of Foshan Lighting for 11 years, Foshan Lighting has long been OEM for OSRAM. Barclays Bank believes that the historical relationship between the two makes Foshan Lighting naturally one of the candidates.

Chinese enterprises rush to overseas markets

Philips and Osram have been engaged in the manufacture and sale of lamps for more than 100 years. With the rise of new energy-saving technologies, the profitability of the traditional lighting business of the two companies is not as good as before.

An investor said that the spin-off or sale of business is a common method used by foreign companies in the face of declining performance or losses. Looking back at the history of OSRAM, in order to focus on the core business, the Siemens Group split Osram separately in 2013, but after the listing, OSRAM faced fierce competition in the lighting industry.

In April 2015, OSRAM announced plans for its spin-off channel business, including CLB (traditional lighting and ballasts) and LL&S (LED lights and systems), mainly related to the division of lighting products, brand licensing schemes, and global factories. Reorganization plan, etc. After the luminaire business is divested, the company will form three new pillar industries, including optoelectronic semiconductor LED chips, special lighting, lighting solutions and systems.

Why does the “baggage” that foreign companies want to get rid of is the “fragrance” in the eyes of Chinese companies? Barclays Bank believes that the significance of this M&A is that it can enable Chinese companies to obtain overseas sales channels, and at the same time with low-cost domestic Manufacturing costs complement each other.

Most of the traditional lighting enterprises have advantages in domestic channels and weak export links. The international brand awareness is basically zero. With the increasing intention of domestic LED industry chain enterprises to go abroad, the integration of overseas LED lighting industry chain enterprises and channels will be Put on the agenda. Most enterprises with financial strength will be more effective in the rapid development of mergers and acquisitions, and they will not be gradually developed through their own expansion channels. International companies such as Philips, Osram, GE, CREE, etc. are also taking M&A as an important means. Constantly growing and growing.

In response, the above-mentioned investors told the Securities Times·Loss Finance reporter that several companies in the country that are potentially involved in the bidding are quite similar, but the one bidding for the OSRAM business will open the gap with other companies in the future.

However, in addition to paying attention to the overseas mergers and acquisitions, the market is also concerned about the integrated operation after the successful bidding. As OSRAM CEO Berlien expressed, he hopes that the new successor will maintain the second industrial status of the OSRAM lighting brand. .

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