U.S. regulators nix $3B Philips lighting sale, complicating HealthTech shift

Philips CEO Frans van Houten

Wall Street may be waiting for Royal Philips ($PHG) to get rid of its lighting businesses to give the conglomerate any credit for its moves to create a business focused solely on healthcare and consumer technologies. If so, they may have to wait a little while longer. A lighting deal has fallen through under U.S. regulatory scrutiny, but Philips said that this won't impact plans for its remaining lighting business.

Philips disclosed that under pressure from the Committee on Foreign Investment in the United States (CFIUS) Philips and GO Scale Capital terminated their agreement that the Chinese firm would acquire an 80.1% interest in the conglomerate's Lumileds lighting business for up to almost $3 billion. This will complicate the company's shift to redefine itself as working on 'HealthTech' and slow its access to that capital to invest into it.

"I am very disappointed about this outcome as this was a very good deal for both Lumileds and the GO Scale Capital-led consortium. This outcome does not, however, impact the fundamentals of the Lumileds business," said Philips CEO Frans van Houten in a statement.

He continued, "Lumileds is a highly successful supplier of lighting components to the general illumination, automotive and consumer electronics markets with a strong customer base. We will now engage with other parties that have expressed an interest in exploring strategic options for Lumileds to pursue more growth and scale."

For now, Philips will keep the Lumileds business on its books as discontinued operations. The conglomerate said that this deal falling through doesn't impact the separation process for the remaining Lighting business that Philips is already pursuing as an independent transaction.

The Lumileds transaction would have introduced $2.8 billion in cash, with the potential for another contingent $100 million payment. So, the timeline for Philips to free up that cash, as well as what's tied up in the other remaining Lighting business, has gotten much more murky.

- here is the Philips announcement
- and here is a take from the WSJ

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