• CEO says getting new sale agreement may take until 2H of 2016
  • Philips still not decided on IPO or sale for lighting division

Royal Philips NV Chief Executive Officer Frans van Houten said a planned sale of its lighting-components business may earn less than a deal scrapped last week due to U.S. opposition on national security considerations.

“There’s some concern that the value realization in a new deal will be somewhat lower than the original deal,” Van Houten said in an interview Tuesday on Bloomberg TV. “We have other interested parties that are now knocking on the door.”

Frans van Houten
Frans van Houten
Photographer: Jasper Juinen/Bloomberg

The CEO, who was speaking following publication of fourth-quarter earnings, declined to give details on expectations for a new valuation and cautioned any new agreement may take until the second half of 2016.

Philips last week canceled a planned $2.8 billion sale of its lighting-components unit called Lumileds to a consortium led by GO Scale Capital of China because the two sides failed to get the deal through the Committee on Foreign Investment in the United States, a regulator charged with vetting foreign acquisitions to protect national security. Amsterdam-based Philips had agreed to sell an 80.1 percent stake in the unit that makes LED components and automotive lights and is reliant on semiconductor technology.

No Lumileds, Lighting Combination

Lumileds won’t be combined with the company’s lighting division being carved out as part of a focus on consumer health-care technology, Van Houten said in the interview. He reiterated the Dutch company is looking at two options of either selling the division or spinning it off through an initial public offering.

“We are engaging with potential investors, we are getting statements of interest coming through,” he said. “At the same time we continue full force with the IPO.”

During the period when Philips was trying to push the GO Scale deal past U.S. regulators, Lumileds business fundamentals may have deteriorated, analysts including Hans Slob of Rabobank said last week. A new transaction “could possibly lead to a $1 billion lower outcome,” he wrote in a note.

Philips shares losing value since Lumileds sale was announced
Philips shares losing value since Lumileds sale was announced

KKR & Co, CVC Capital Partners and Bain Capital unsuccessfully bid for Lumileds in March. With sales last year of about $2 billion, Lumileds is the biggest supplier of lamps to the automotive industry, equipping one out of every three cars in the world, according to the company’s website. The stand-alone company was created in 2014 to combine the LED components and automotive lighting businesses.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE