Philips Announces Intent to Acquire Genlyte

Philips Electronics NV, the electronics giant from the Netherlands, is all set to acquire the Genlyte Group in a cash purchase worth $2.7 billion. The company has been on a buying spree over the past two years in the lighting industry, and should the acquisition of the U.S.-based Genlyte Group come through, it would become the biggest lighting company in North America.

As it stands now, there is no reason the acquisition should not go through, especially considering the board of directors at Genlyte are for the offer Philips announced on Monday. Philips has said in the next five business days, it would send out a tender offering a price of $95.50 per Genlyte share.

Philips’ price per share is a 52% premium on the price of Genlyte shares at close on Friday. Also enticing is the fact that the price per share would be in cash. According to Philips, its acquisition of Genlyte was ideal, considering the company had a huge customer base in North America.

A statement by Philips on Monday said acquiring Genlyte would make it possible for the company to speed up the timeframe by which it could make available green lighting technology in North America, something that could go a long way in impacting energy savings in the region.

Theo van Deursen, the CEO of Philips Lighting, said the acquisition of Genlyte would enable Philips to ‘speed up the market rollout of more energy-efficient lighting and the introduction of new lighting technologies, like solid state lighting.’

Philips’ announcement of its intent to acquire Genlyte seems logical, especially considering the fact that the company has been steadily acquiring companies involved with light emitting diodes, or LEDs. Genlyte has product offerings across a number of applications, including LEDs.

Earlier in June this year, Philips paid $688 million to purchase another U.S.-based company, an LED manufacturer called Color Kinetics. Before that, it had acquired the remaining 50% in Lumileds Lighting, another U.S.-based LED manufacturer, for €765 million. Towards the end of 2006, the company had also acquired Partners in Lighting, a company based out of Belgium, for €550 million.

The statement by Philips relating its intention of acquiring Genlyte said it expects the merger to go through by the first quarter of 2008. It said once the merger was complete, it would integrate Genlyte into its lighting division’s luminaries business.

The lighting division of Philips contributed almost 20% of the total sales of €26.98 billion, or $40.12 billion, that the company registered in 2006. It has as its competitors General Electric and Siemens AG’s Osram. The announcement regarding Genlyte saw a 1.6% rise in Philips shares during morning trading in Amsterdam.