Philips buys 51% stake in Saudi lighting firm

Philips buys 51% stake in Saudi lighting firm

March 18 - 2014

Netherlands-based Royal Philips announced Monday that it has entered into agreements to acquire 51 percent of General Lighting Company (GLC), a lighting company in Saudi Arabia for $235 million (on a cash-free, debt-free basis) plus additional transaction costs.

Philips will buy the GLC stake from a consortium of shareholders including Alliance Holding, the Hejailan Group, and The Carlyle Group, it said in a statement.

Under the terms of the agreements, Philips’ current lighting activities in the Kingdom will be combined with GLC forming a joint venture named Philips Lighting Saudi Arabia. Alliance Holding will be the JV partner with a 49 percent stake.

The Carlyle Group said it has entered into a definitive agreement to sell its 30 percent stake in General Lighting Company (GLC) to Royal Philips. In addition, shareholders Alliance Holding Ltd (Alliance) and the Hejailan Group have also agreed to sell holdings alongside The Carlyle Group, resulting in a majority sale.

During Carlyle’s four year tenure at GLC, several successful initiatives were launched that helped transform GLC’s Saudi-focused business into an international lighting player active in more than thirty markets, including the acquisition of the largest lighting company in Malaysia, Davex and establishing an experienced African sales team and distributor network in key cities which allowed GLC to sell products in 12 African countries. Production was doubled to 15 million units/year through the building of a third factory in Riyadh, dedicated to manufacturing high volume lighting products.

Firas Nasir, Managing Director and Co-head of the Carlyle MENA team, said: “Through close collaboration with our partners and GLC’s talented management team Carlyle fostered a number of successful initiatives at the company, expanding geographic presence and enhancing operational capabilities.

GLC is one of several investments Carlyle has made in the Middle East and Turkey and we continue to see excellent opportunities in the region.”

The new JV will employ approximately 1,300 people, the statement said.

It will focus on LED products, systems and services for the lighting market and will manufacture and distribute professional LED lighting fixtures across the value chain.

It will also create growth opportunities in sustainable technologies to support the government’s objective to reduce energy consumption, the statement added.

The deal is subject to customary regulatory approvals and is expected to be completed later this year. Moelis & Company and Norton Rose Fulbright advised Philips, Gibson Dunn advised The Carlyle Group and the Hejailan Group and Baker & McKenzie advised Alliance Holding on the deal. GIB Capital advised all sellers.

Saudi’s lighting market is forecast to grow strongly between 2014- 2018, thanks to targeted spending on construction and government and private investments in energy efficient lighting initiatives, said Philips.

“By partnering with GLC, Philips will be able to grow its business in this important market, particularly in relation to LED lighting,” said Eric Rondolat, CEO of Philips Lighting.

“We expect LED penetration in the KSA to achieve strong double-digit growth by 2018, driven by investments in public and private infrastructure.”

Philips, which has been present in KSA since 1935, is looking to expand its footprint. In 2012, the company announced a joint venture with Al Faisaliah Medical Systems to sell Philips Healthcare solutions and services in the country.



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