Why Philips May Earn Less for Lumileds This Time Around: Chart

Royal Philips NV stands to earn less from a new sale of its lighting-components unit Lumileds after the previous $2.8 billion agreement with a consortium led by GO Scale of China failed to gain approval from The Committee on Foreign Investment in the United States.

The unit’s profitability, on which a sale price is at least partly based, suffered last year from a lower gross margin and higher investments, Philips said in a statement last week. Earnings before interest, taxes and amortization fell every quarter, resulting in full year ebita of 71 million euros ($77 million) compared with 156 million euros in 2014. This 54 percent decline bodes poorly for the value of Lumileds, which Chief Executive Officer Frans van Houten confirmed on Bloomberg TV last week may be “somewhat lower” than the price agreed with GO Scale.

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