Royal Philips Electronics announced today that the company has signed an agreement with Kohlberg Kravis Roberts & Co. (KKR), Silver Lake Partners and AlpInvest Partners NV through which the consortium will acquire an 80.1% stake in Philips' Semiconductors business.
Philips will retain a 19.9% stake in this business.
The transaction will put the enterprise value for Philips' Semiconductors business
at approximately EUR 8.3 billion - consisting of EUR 3.4 billion purchasing price,
EUR 4.0 billion for debt and other liabilities, and EUR 0.9 billion for Philips'
remaining stake. Philips estimates it will receive cash proceeds after tax and
transaction related costs of approximately EUR 6.4 billion. The transaction is
expected to close in the fourth quarter of 2006, subject to closing conditions,
including governmental and regulatory approvals.
Philips' Semiconductors is a leading supplier of silicon system solutions for
mobile communications, consumer electronics, digital displays, contactless payment
and connectivity, and in-car entertainment and networking, with approximately
37,000 employees worldwide. The business had sales in 2005 of EUR 4.6 billion.
Commenting on today's announcement, Mr. Gerard Kleisterlee, President and CEO of
Royal Philips Electronics, said: "This is a defining moment for both Philips and
its semiconductors business. As a stand-alone company, the semiconductors business
will have every opportunity to realize its full potential and we are very pleased
to have found strong partners that share our belief. As a business partner, we
will remain strongly committed to the future success of the business. As Philips,
we are completing our shift away from running cyclical activities, and can fully
focus on building an even stronger company in Healthcare and Lifestyle around the
brand promise of Sense and Simplicity."
Kleisterlee explained that Philips was now a much simpler company, committed to
improving the quality of peoples? lives through meaningful innovation. He said
resources would be focused on capturing value from some of the most important
global economic, social and demographic trends. Notable among these were the trend
for better healthcare and more well-being, the need to provide energy efficient
solutions (e.g. in lighting) and the desire for rewarding consumer lifestyle
Upon completion of the transaction, Mr. Frans van Houten will relinquish his
current positions as member of the Board of Royal Philips Electronics and CEO of
Philips' Semiconductors business to become the President and CEO of the new
stand-alone semiconductors company. The renaming of the new company will be
announced in due course.
Commenting on today's announcement, Mr. van Houten said: "Today's agreement with
KKR, Silver Lake and AlpInvest represents an exciting foundation upon which our
new semiconductors company can successfully grow and compete as a stand-alone
company. The business, with its strong R&D capabilities and broad intellectual
property portfolio, will continue to focus on strengthening its performance and
presence in Mobile & Personal, Home, Automotive & Identification and Multi Market
Semiconductors - our four key markets. We remain entirely committed to completing
our successful business renewal program."
The consortium consists of KKR, one of the world's most experienced private equity
firms, Silver Lake, the leading private equity firm focused on technology and
AlpInvest, a major Dutch-based private equity investor operating worldwide.