CVC, KKR, Bain Said to Mull $6 Billion Philips Lighting Bids

  • Some buyout firms would also consider joint offer for Lumileds
  • JPMorgan, Goldman Sachs are advising Philips on divestment

Royal Philips NV’s lighting division is attracting interest from a number of the world’s largest private-equity firms, in a deal that could value the unit at about 5.5 billion euros ($6 billion), people familiar with the matter said.

CVC Capital Partners, in partnership with KKR & Co., Bain Capital, Onex Corp. and Blackstone Group LP are among buyout firms in early stages of preparing bids for the division, said the people, who asked not to be identified because discussions are private. JPMorgan Chase & Co. and Goldman Sachs Group Inc. are advising Philips on the sale, the people said. No final decision has been made on the bids, the people said.

“The 5.5 billion euros isn’t very high,” Hans Slob, an analyst for Rabobank said by phone, adding that the valuation on the unit implies a similar multiple to rival lighting company Osram, which was split from its parent company in 2013. That may be due to the fact that the process is just getting started, he said.

The Amsterdam-based company is splitting its lighting division from its health-care and consumer-lifestyle units as Chief Executive Officer Frans van Houten positions the business to take advantage of growing demand from consumers to monitor their health through devices and phone applications. Philips has said in the past it was also exploring an initial public offering for the business.

Philips shares closed 1.1 percent higher in Amsterdam at 24.89 euros, bringing the stock’s advance for the year to 3 percent.

Some of the bidders would also be interested in buying the lighting components unit, Lumileds, if U.S. regulators block a previous $2.8 billion sale to a group of investors led by China’s GO Scale Capital, the people said. KKR, CVC and Bain unsuccessfully bid for Lumileds in March. That sale also includes Philips’s Automotives lighting business.

“It would be nice if Philips could also sell Lumileds, Automotive to one of these parties,” Slob said. “It’s a relief for investors and Philips that the company wouldn’t have to go to the markets again with this asset.”

Spokesmen for CVC, Philips, Goldman Sachs, Blackstone and JPMorgan declined to comment. Spokesmen for KKR, Onex and Bain didn’t immediately respond to requests for comment.

KKR and Bain are no strangers to Philips and Van Houten as they were part of a group that purchased the company’s semiconductor unit called NXP in 2006, when Van Houten was leading the unit.

Philips, founded in 1891, has sold lights for over a century. The business makes up about a third of Philips’ revenue, its second-largest unit after the health-care division.

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