Dutch electronics giant Philips said on Friday a planned $2.8-billion majority share sale of its Lumileds lighting unit to Beijing-based GO Scale Capital has been cancelled because of US regulatory concerns.
Both companies failed to convince the Committee on Foreign Investment in the United States (CFIUS) to clear the deal, Philips said, adding it is seeking another buyer.
"We will now engage with other parties that have expressed an interest in exploring strategic options for Lumileds," Philips chief executive Frans van Houten said in a statement.
"I am very disappointed about this outcome as this was a very good deal for both Lumileds and the Go Scale Capital-led consortium," Van Houten said.
Philips and GO Scale have now withdrawn their CFIUS filing, the Dutch company said, calling the US regulatory concerns "unforeseen".
Lumileds has research and development and production facilities in California's Silicon Valley.
Philips will continue to report the Lumileds business as "discontinued operations", the company added.
Amsterdam-based Philips in October announced that the sale of an 80.1 majority share stake was in doubt because of unspecified CFIUS concerns, but at the time it said they would be addressed.
GO Scale Capital said had the transaction gone through it "would have combined Lumileds' world-leading technology and know-how with the highly competitive LED manufacturing industrial base in China."
"Unfortunately all such efforts fell short of addressing unexplained (US) government concerns," it said in a statement.
- 'Trade politics' -
"The decision by the CFIUS is a pure piece of trade politics," said Jos Versteeg, analyst at the Amsterdam-based Theodoor Gilissen private bank.
"It's clear that the Americans don't want the technology to go to China," said Versteeg.
"However, the deal will eventually go through, but with another buyer," he told AFP, adding the setback was unlikely to impact on Philips' strategy of moving away from lighting in the healthcare-lifestyle sector.
"It's unlikely though that Philips will get the same price as was offered by GO Scale Capital," he added.
Philips in 2014 announced it would split in two, separating its healthcare-lifestyle arm from its historic lighting section in a move to streamline operations.
The split is expected to be completed some time this year, with analysts predicting that Philips could eventually sell off Lighting, one of its core businesses for many years.
Philips, which sold its first light bulb a few years after it was founded in 1891, has for the past dozen years focused on medical equipment, which now accounts for more than 40 percent of sales.
Lumileds has operations in more than 30 countries and employs around 8,800 workers world-wide.
GO Scale Capital is a new investment fund sponsored by GSR Ventures and Oak Investment Partners with offices in Beijing, Hong Kong and Silicon Valley.
Its current investments include US-based Boston Power, which makes electric vehicle batteries, and China-based Xin Da Yang which produces electric vehicles.
Originally founded in the southern Dutch city of Eindhoven, Philips employs 112,000 people worldwide.
Source: AFP
GMT 09:47 2018 Tuesday ,23 January
SAP unveils big push into French tech start-upsGMT 05:07 2018 Tuesday ,23 January
Noble Group shares surge 37 percent on buyout talksGMT 19:07 2018 Monday ,22 January
BAKS spent Dh225m on charity projects in 2017GMT 22:52 2018 Sunday ,21 January
French firm "recalls baby milk product"GMT 22:27 2018 Sunday ,21 January
US company plans funds that double bitcoin price movesGMT 21:23 2018 Sunday ,21 January
Pence starts Mideast tour in Egypt amid Arab angerGMT 08:54 2018 Saturday ,20 January
Million-euro bill for firm behind Paris bike-share chaosGMT 10:47 2018 Friday ,19 January
German chemical giant BASF sees 'significant' profit leapMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor