We present a coverage of the almost complete "buyout" of Lumileds by Philips, as it appeared in the on-line press yesterday.
The important point to remember is that Philips is lately continuously repositioning
itself in the world market by both expanding and restricting its activities
in an attempt to gain technology and market leadership in critical future
developments. (Please note that with the notable exception of the official
company announcement, most journalists almost fail to highlight the importance
of this movement.)
Philips acquires controlling state in Lumileds
Philips has gained a controlling 96% interest in Lumileds, a world leader
in high-brightness LEDs (Light Emitting Diodes) for solid-state lighting. The
deal underscores Philips' commitment to growing its Lighting business and establishing
a unique position in a technology that's set to transform the lighting market.
Solid-state lighting is seen as the biggest revolution in lighting technology
since Edison invented the incandescent bulb. Although it's been a niche-market
for general lighting markets in the past, the creation of white-light LEDs a
few years ago has transformed its potential. Over time, solid-state lighting
will revolutionize how we light our homes, our cars, our shops and our cities.
At today's press briefing Gerard Kleisterlee, president and CEO of Philips,
and Theo van Deursen, CEO of Philips Lighting (left), demonstrate an example
of photonic textiles, a soft cushion with an LED lighting system serving
Created as a joint venture between Philips and Agilent Technologies in 1999,
Lumileds was set up to pioneer everyday uses of solid-state lighting. Today,
it produces LEDs for automotive lighting, computer displays, LCD TVs, signage
and signaling and general lighting. Lumileds has its headquarters in San
Jose, USA, and employs some 1760 people in San Jose, California, USA, Penang,
as well as Best, The Netherlands.
In purchasing Agilent's 47% holding, Philips has extended its capabilities
in LED lighting. It now has a unique position covering the full lighting
value chain - from the semiconductor dies that form the basis of LEDs
to complete solid-state lighting modules and systems. By aligning Lumileds LED
with existing LED lighting modules and luminaries of Philips Lighting
competencies in Philips Semiconductors, Philips will now be an excellent
position to strengthen its leadership position in this new technology.
As a world leader in conventional lighting, Philips has strength in depth.
It can leverage its wider lighting know-how, production capabilities and distribution
channels. And it can call on its expertise in research to drive innovation in
this huge new field.
LED (Light Emitting Diode) die is the basis and represents the first
segment in the LED value chain
Lighting as you never seen before
Until recently, the term LED conjured up images of the little red or
green lights on our computers or washing machines. But solid-state
lighting goes far beyond this.
White-light LEDs can be based on a technique that involves adding a layer
of phosphors to a blue-light semiconductor LED. It's this breakthrough technology
that's enabling a transformation in lighting.
Imagine lights that adapt automatically to the time of day, creating colors
and effects to suit your activities or mood. Think of the possibilities for
design, fashion and safety when you can embed lighting in roads, building materials,
furniture, car interiors, even clothes (such as jackets for police or road workers).
Consider what shop-designers and city planners could do with lights of every
color that can be programmed to deliver an array of effects. Not just on/off
or dimmed, but all kinds of states, even mimicking a video display.
This is the world of solid-state lighting. It's a world of endless creative
possibilities. Yet it's also extremely practical, because LEDs are small,
robust and highly energy efficient.
An LED module is a highly versatile, self contained lighting system.
In an era of climate change and soaring energy prices, very low power consumption
is an invaluable advantage over conventional lighting. It makes lighting safer
and easier to control as well. And it opens the way to new applications, particularly
in emerging markets. For instance, we may see new forms of lighting in rural
areas of countries like India or China where power supplies are limited.
LEDs are also extremely long-life, so they virtually never need to be replaced.
For example, LEDs used for street lighting could last 10-15 years in continuous
normal use. What's more, the combination of energy efficiency and low maintenance
will make many applications less expensive. So LEDs are cost-effective, as well
as highly attractive and versatile.
Continuing a Philips tradition
Throughout its 114 year history, Philips has been improving people's lives
through lighting. This move to strengthen its position in solid-state lighting
continues this tradition. It also demonstrates Philips' commitment to growth,
innovation and emerging markets.
Philips buys out Lumileds as Agilent cashes chips
As Agilent sells off its semiconductor business, Philips acquires the company's
47% stake in LED manufacturer Lumileds for nearly $950 million.
Lighting pioneer Royal Philips Electronics is to buy Agilent Technologies’ 47%
share in the LED manufacturer Lumileds for €765 million ($948 million)
Philips CEO Gerard Kleisterlee (left) and Theo van Deursen, the CEO of Philips
Lighting (right), say that the illumination market is poised on the edge of
solid-state revolution similar to that caused by the invention of the light
bulb. The executives added that following the Lumileds acquisition Philips would
invest in technological innovation.
The deal, which will mean that Philips owns 96.5% of Lumileds, is part of Aglient’s
wider plan to sell off its entire semiconductor business unit, which also includes
GaAs IC, fiber-optic component and low-brightness LED manufacturing facilities.
Private equity firms Kohlberg Kravis Roberts and Silver Lake Partners are
expected to take control of the remaining semiconductor business in a deal worth
about $2.6 billion in total, according to reports in the Wall Street Journal
Founded in 1999 as a joint venture between the two companies, Lumileds makes
LED chips, packaged LEDs and is perhaps best known for its high-power Luxeon
And it is this high-power segment for lighting applications that Philips is
primarily interested in. “This extends our involvement across the LED
value chain,” said Gerard Kleisterlee, the president and CEO of Philips. “[We
now] have the full value chain under our control."
Theo van Deursen, the CEO of Philips Lighting, said that the Lumileds acquisition
was of "huge strategic importance" to the Dutch company. He also extolled
the virtues of LED-based lighting for tempting shoppers and in medical applications.
But it is the general illumination market that is the critical one for Philips. "We
see this as a long-term growth market and we are going to invest in innovation," added
The LED manufacturer’s history is rooted in Hewlett-Packard (HP), where
it began life as HP’s optoelectronics division.
That division became part of Agilent Technologies when HP split into two businesses
Now headquartered in San Jose, CA, Lumileds employs 1760 people globally.
Company sales grew 28% in the fiscal year ending July 2005 to reach $324 million,
Philips buys lighting firm stake for 765 mln euros
Dutch group Philips Electronics said on Monday it would buy Agilent Technologies
Inc's 47 percent stake in lighting firm Lumileds for about 765 million euros
Philips, the world's biggest lighting maker, also said in a statement it
would buy back up to 1.5 billion euros of its own shares in a new share buyback
program over the next 12 months. The shares will be canceled.
Philips, Europe's biggest consumer electronics producer and the region's number
three in semiconductors, had been expected to announce a further share buy-back
in the second quarter. In the first half of the year, Philips bought back about
500 million euros worth of its own shares and canceled them.
The Lumileds Lighting acquisition will give Philips 96.5 percent and control
of the company.
"While we remain focused on expanding the company through value-creating
acquisitions in our Medical Systems, Domestic Appliances and Personal Care and
in our Lighting businesses, we'll continue managing our capital efficiently
to create optimum value for our shareholders," Philips Chief Executive
Gerard Kleisterlee said.
Agilent Dumps Semiconductors
Citing a need to focus its energies on its core business, equipment test manufacturer
Agilent (Quote, Chart) sold its semiconductor business for $2.66 billion and
shed roughly 1,300 jobs from its roster Monday.
The Palo Alto, Calif., company also announced its intention to sell its stake
in Lumileds for $950 million and repay $50 million of debt from the LED manufacturer.
The money will be used in an immediate share repurchase program valued at
$4 billion. Agilent officials said they intend to pay the company's $1.5 billion
convertible debenture -- a debt that can be converted to stock later by the
investor -- which could reduce the company's outstanding shares by 36 million.
The deals are expected to close by the end of October, pending regulatory
and governmental approvals.
Bill Sullivan, Agilent president and CEO, said the moves were made to focus
its business as a pure-play test measurement company and reduce global infrastructure
costs by $450 million.
"It has become increasingly clear that investors also prefer this exclusive
focus on the $40 billion measurement market," he said in a statement. "Returning
the proceeds of these divestitures via share repurchases demonstrates Agilent's
commitment to realizing superior value for our owners as well as our customers."
Agilent made the announcement the same day it announced its third quarter
2005 results, which showed the company fell slightly behind market expectations
of $1.7 billion to $1.8 billion for the quarter. Third-quarter revenues reached
The company expects the restructuring to cost $200 million. Officials said
the layoffs will be accomplished through a combination of employee moves from
Lumileds and semiconductor business, work-force reductions and attrition.
A joint investment group of Kohlberg Roberts & Co. and Silver Lake Partners
bought Agilent's semiconductor business, while Royal Philips Electronics forwarded
the $950 million for Lumileds.
Officials said they aren't finished shedding divisions non-essential to its
new focus on test equipment. They plan to spin off its System on a Chip test
and memory test businesses as soon as practical in 2006.