Royal Philips (NYSE:PHG) said today it inked an agreement to sell an 80.1% interest in its Lumileds lighting business to funds managed by Apollo Global Management affiliates, bringing in approximately $1.5 billion for the company.
Philips said it will retain a 19.9% interest in the company, which produces LED components, and hopes that the sale will be completed in the 1st half of 2017.
The sale is part of Philips’ current strategy of shifting away from lighting and towards healthcare, and the 2nd attempt to offload the business this year. In January, a $3.3 billion deal to offload an 80% stake in the components division to Asian buyers was blocked by U.S. regulators.
“With this transaction, we will be completing an important phase of the transformation of our portfolio and I am satisfied that in the Apollo managed funds we have found the right owner for Lumileds. In line with our strategic focus on health technology, Lumileds has been operating as a standalone company within Philips since early 2015. With Apollo managed funds acquiring a majority interest in Lumileds and partnering with Philips, Lumileds is now well-positioned for further growth and value creation, building on its robust innovation pipeline, technology leadership and strong customer base,” Philips CEO Frans van Houten said in prepared remarks.
Apollo Global Management is an alternative investment manager with assets of approximately $189 billion, the company said.
“We are extremely excited about the opportunity for our managed funds to acquire Lumileds. We look forward to partnering with Philips and the outstanding management team and employee base at Lumileds, and bringing in Apollo’s resources to support the continued growth and innovation of this industry-leading business,” Apollo senior partner Robert Seminara said in a prepared release.
Lumileds has operations in more than 30 countries, with approximately 9,000 employees. The company reported sales of $2 billion in 2015, according to Philips.
“I am convinced that together with the Apollo managed funds, Lumileds will sharpen its focus and accelerate innovation in its leading product portfolio of lighting components. With our strong R&D programs and intellectual property, we are ready to address the current and future needs of our customers. Lumileds will work closely with its industry partners and customers and capture growth opportunities in an exciting industry,” Lumileds CEO Pierre-Yves Lesaicherre said in a prepared statement.
In October, Philips saw third-quarter profits surge more than 18%, sending its share price to a 19-month high. The company posted profits of €383 million ($417.3 million) on sales of €5.90 billion ($6.43 billion), for a bottom-line gain of 18.2% on sales growth of 1.1%, compared with Q3 2015.