Dutch lighting giant Philips said today that it will sell the majority of its LED components and auto-lighting businesses to Go Scale Capital, an investment group composed of venture capital firms GSR Ventures and Oak Investment Partners. The Lumileds business that is to be sold is Philips’s lighting component manufacturing and automotive lighting arm. Philips is selling 80.1% of the stock in Lumileds for $2.8 billion, while keeping 19.9% for itself. This deal values Philips in its entirety at about $3.3 billion.
This decision is part of Philips’s transition away from manufacturing and into services. The company will focus on expanding its medical equipment and lifestyle products businesses, and on supplying lighting for large clients like cities and sports stadiums.
The company’s decision is potentially due in part to declining sales of LED components, which could be attributed to intense competition in the industry, according to the Wall Street Journal. LED lighting lasts longer than traditional incandescent bulbs, something that has dramatically changed the dynamics of the industry.
This news comes after Philips announced last month that it will separate its remaining lighting businesses, known as Lighting Solutions, from the rest of the company in order to launch an initial public offering next year. Philips said that Lighting Solutions will still be one of Lumileds’s major customers.
[via Wall Street Journal]