PE-backed $3.3bn Lumileds carve-out delayed by US regulators

Issued by the Committee on Foreign Investments in the United States (CFIUS), the warning was aired by Philips as it published its Q3 2015 results this week. According to the Dutch multinational, the decision by the US regulators adds "uncertainty" to the closing of the PE takeover.

The announcement comes seven months after Philips revealed sale plans for its lighting components business Lumileds. The parent set up the subsidiary as a joint venture with Hewlett-Packard spin-off Agilent Technologies in 1999 and bought out the latter's 47% stake for $950m in 2005, securing a 96.5% interest in the process.

In March 2015, Philips agreed to sell an 80.1% holding in Lumileds to several Chinese private equity houses for an upfront $2.8bn and a deferred $100m payment; the corporate intended to keep the remaining 19.9%.

GO Scale Capital, a technology-focused fund launched by GSR Ventures and Oak Investment partners, led the group of acquirers. Additional investors included GSR Capital as well as holdings Asia Pacific Resource Development and Nanchang Industrial Group.

The takeover, valuing Lumileds around the $3.3bn mark, would see the business retain its existing brand and management team, led by CEO Pierre-Yves Lesaicherre. As part of the changes, GSR Ventures co-founder Sonny Wu would join the company's board as interim chairperson.

At the time, the acquirers appeared confident that the deal would go through in Q3 2015 and proceeded to secure a term loan and revolving facility worth $1.93bn from Bank of China.

Headquartered in Eindhoven, the Netherlands, Lumileds manufactures lightning components such as LEDs for clients within the illumination, automotive and electronics sectors. The company is active in more than 30 countries worldwide and employs a combined 8,300 workforce. In 2014, it posted $2bn in turnover and an EBITA margin in the double-digit region.

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