(Bloomberg) -- Royal Philips NV is in talks to sell its Lumileds lighting-components division to Apollo Global Management LLC after scrapping a plan to sell the business for $2.8 billion earlier this year amid regulatory concerns, people with knowledge of the matter said.
Lumileds light bulbs
Apollo is the likeliest buyer after other private equity firms dropped out of talks, said the people, who asked not to be identified because the process is private. The Amsterdam-based company is aiming to reach a deal by the end of October, but talks could still fall apart, one of the people said.
Philips is in ongoing discussions with interested parties, said Steve Klink, a spokesman for the company. He declined to comment on individual names.
A representative for Apollo didn't respond to phone and e-mail requests for comment.
In January, Philips canceled a planned sale of Lumileds to a group led by GO Scale Capital of China because of opposition from a U.S. regulator charged with vetting foreign acquisitions to protect national security. Buyout firms including KKR & Co., CVC Capital Partners and Bain Capital were among the losing bidders, the people said at the time.
Frans van Houten
Philips Chief Executive Officer Frans van Houten spun off the lighting division in May and is trying to sell Lumileds to sharpen the company's focus on health care.
Van Houten has said he's likely to get less for Lumileds now than the original price. Analysts at ING Groep NV estimate Lumileds's total value at 1.8 billion euros ($2 billion), before expenses, a discount to the previous sale's price.
The report “is reassuring,” analysts at Societe Generale SA wrote in a note Monday, noting that some skepticism was starting to build up in the market about Philips' ability to conclude a sale this year. Not doing so “would certainly have been an irritant in Philips' transformation and led to further skepticism among long-time followers of the brand.”
Lumileds is the biggest supplier of lamps to the automotive industry, equipping one out of every three cars in the world, according to its website. The stand-alone company was created in 2014 to combine the LED components and automotive-lighting businesses.
Philips shares rose as much as 1.3 percent to 26.72 euros and traded at 26.42 euros as of 11:28 a.m. in Amsterdam. The stock has gained about 12 percent this year.
--With assistance from Jonathan Browning Sarah Syed and Celeste Perri To contact the reporters on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net, Aaron Kirchfeld in London at akirchfeld@bloomberg.net. To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Elizabeth Wollman, Devin Banerjee
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