(Reuters) – Philips‘ sale of the majority of its lighting components business is nearing an end as buyout groups are lining up final bids, three sources said on Monday.
A consortium of private equity firms CVC and KKR as well as investor Bain Capital were expected to hand in offers by a Monday deadline valuing the business at roughly 2.5 billion euros ($2.8 billion), the sources said.
The medical electronics-to-coffee machines group, which started making light bulbs 123 years ago, is splitting off its lighting business, whose earnings have been squeezed in a price war with Chinese makers of light-emitting diodes (LEDs). It has vowed to focus on higher-margin activities.
Separately and ahead of a potential spin-off, it has combined its so called Lumileds and its car lights division into a stand-alone company and has mandated Morgan Stanley to find a buyer for the business, which has 1.4 billion euros in sales.
Philips has said the lighting components business would be better placed to compete on a standalone basis for outside customers, which currently regard Philips as a rival. It intends to hold onto a minority stake, however, as about a fifth of Lumileds’s sales of 500 million euros are made to the parent.
Profit figures for the business have not been made public but sources have said in the past its core earnings or EBITDA are about 290 million euros.
Peers such as Hella, Cree and Acuity trade in a range of 6.1 to 13.4 times expected earnings.
Philips and the buyout groups declined to comment.