Dutch electronics and medical technology giant Royal Philips NV appears to be getting some pushback on its move to sell the LED components and automotive lighting business it split off under the Lumileds brand.
The company had announced in June last year that it would seek a buyer for the Lumileds business and spin off its lighting solutions business separately, possibly in an initial public offering, and in March this year Philips said it had a deal with a group led by China’s Go Scale Capital to sell 80.1% of the business in a deal that valued Lumileds at approximately $3.3 billion.
This week, Philips said the sale was coming under scrutiny from the Committee on Foreign Investment in the United States, a U.S. government committee that vets foreign acquisitions to protect national security.
“In the course of seeking regulatory approvals regarding the sale of an 80.1% interest in Lumileds to a consortium led by GO Scale Capital, the Committee on Foreign Investment in the United States (CFIUS) has expressed certain unforeseen concerns. Philips and GO Scale Capital will continue to engage with CFIUS and will take all reasonable steps to address its concerns, but given these, the closing of the transaction is uncertain,” Philips said in a third-quarter income statement released Oct. 26.
Also in that statement, Philips reported that its remaining lighting business – the part slated for a potential IPO next year – had improved profitability while quarterly comparable sales declined 3% year-over-year to EUR1.83 billion. LEDs now constitute 44% of the unit’s sales. “Simultaneously, we will continue to proactively manage the conventional lighting market decline, allowing us to deliver improvements to Lighting EBITDA margins,” the company said.