Philips to sell Lumileds majority share for $1.5 billion

Updated 13 December 2016

Philips to sell Lumileds majority share for $1.5 billion

THE HAGUE: Dutch electronics giant Philips has announced Monday the sale of a majority share in its Lumileds LED lighting business for $1.5 billion, after canceling the spinoff earlier this year over US regulatory concerns.
“Royal Philips today announced that it has signed an agreement to sell an 80.1-percent interest in Lumileds to certain funds managed by affiliates of (US-based) Apollo Global Management,” the Amsterdam-based company said in a statement.
Philips said it expected the deal to net the firm approximately $1.5 billion (1.41 billion euros) in cash as well as equity, adding Lumileds is valued at around $2.0 billion.
The new move comes after Philips dropped a planned $2.8-billion sale to Beijing-based GO Scale in January when neither company could convince the US Committee on Foreign Investment (CFIUS) to clear the deal.
“With this transaction, we will be completing an important phase of the transformation of our portfolio and I am satisfied that in the Apollo managed funds we have found the right owner for Lumileds,” said Philips CEO Frans van Houten.
Describing the loss of the earlier GO Scale deal as a “setback,” Van Houten told reporters: “We are confident that this time we will succeed.”
But Van Houten admitted that “given the backdrop of the CFIUS outcome we had to look for a buyer in a considerably smaller landscape of potential buyers.”
“Therefore the premium of the previous process could not be replicated this time,” he told reporters.
The transaction is expected to be completed in the first half of 2017, subject to regulatory approvals.
Van Houten however stressed that with retaining a 19.9 minority stake, Philips also had access to so-called preferred equity shares, meaning the Dutch company will receive an additional income “if Lumileds performs well.”
Jos Versteeg, an analyst at the Amsterdam-based Theodoor Gilissen private bank told AFP that “Mr Van Houten is a very good deal-maker and he made the best deal under the circumstances.”
“It’s always very difficult to make a deal when your best partner has to quit because he’s not allowed to sell,” Versteeg said.
So “at first glance it may seem disappointing, but there is a good part to it as well... if Apollo manages to squeeze some profit out of Lumileds” the price for Philips’ 19.9 percent retaining share will be higher, he said.
Durk Veenstra, market commentator with the private RTLZ economics news channel, said “the price that’s being paid for now by Apollo is (almost) half of what the Chinese were prepared to pay.”
“In short, it hurts (Philips) from all sides,” he said.
Philips in 2014 announced it would split in two, separating its health care-lifestyle arm from its historic lighting section in a move to streamline operations.
Lumileds, which makes LED and car lighting components has operations in more than 30 countries and employs at least 8,800 workers worldwide, including at its research and development and production facilities in California’s Silicon Valley.
Last year it clocked sales of around $2.0 billion.
Philips, which sold its first light bulb a few years after it was founded in 1891, has for the past dozen years focused on medical equipment, which now accounts for more than 40 percent of sales.
Founded in the southern Dutch city of Eindhoven, Philips’ health care arm employs some 70,000 people in 100 countries.
New York-based Apollo is a major global alternative investment manager with assets under management of approximately $189 billion in private equity, credit and real estate funds.
“We look forward to partnering with Philips... and Lumileds, and bringing in Apollo’s resources to support the continued growth and innovation of this industry-leading business,” Robert Seminara, senior partner at Apollo, said.


A Jordan startup delivers eco-friendly alternative to dry cleaning

Updated 05 December 2019

A Jordan startup delivers eco-friendly alternative to dry cleaning

  • Products used by WashyWash are non-carcinogenic and environmentally neutral
  • Amman-based laundry service aims to relocate to a larger facility in mid-2020

AMMAN: A persistent sinus problem prompted a Jordanian entrepreneur to launch an eco-friendly dry-cleaning service that could help end the widespread use of a dangerous chemical.

“Dry cleaning” is somewhat of a misnomer because it is not really dry. It is true that no water is involved in the process, but the main cleaning agent is perchloroethylene (PERC), a chemical that experts consider likely to cause cancer, as well as brain and nervous system damage.

Kamel Almani, 33, knew little of these dangers when he began suffering from sinus irritation while working as regional sales director at Eon Aligner, a medical equipment startup he co-founded.

The problem would disappear when he went on vacation, so he assumed it was stress related.

However, when Mazen Darwish, a chemical engineer, revealed he wanted to start an eco-laundry and warned about toxic chemicals used in conventional dry cleaning, Almani had an epiphany.

“He began to tell me how PERC affects the respiratory system, and I suddenly realized that it was the suits I wore for work — and which I would get dry cleaned — that were the cause of my sinus problems,” said Almani, co-founder of Amman-based WashyWash.

“That was the eureka moment. We immediately wanted to launch the business.”

WashyWash began operations in early 2018 with five staff, including the three co-founders: Almani, Darwish and Kayed Qunibi. The business now has 19 employees and became cash flow-positive in July this year.

“We’re very happy to achieve that in under two years,” Almani said.

The service uses EcoClean products that are certified as toxin-free, are biodegradable and cause no air, water or soil pollution.

Customers place orders through an app built in-house by the company’s technology team.

WashyWash collects customers’ dirty clothes, and cleans, irons and returns them. Services range from the standard wash-and-fold to specialized dry cleaning for garments and cleaning of carpets, curtains, duvets and leather goods.

“For wet cleaning, we use environmentally friendly detergents that are biodegradable, so the wastewater doesn’t contain any toxic chemicals,” Almani said.

For dry cleaning, WashyWash uses a modified hydrocarbon manufactured by Germany’s Seitz, whose product is non-carcinogenic and environmentally neutral.

A specialized company collects the waste and disposes of it safely.

The company has big ambitions, planning to expand its domestic operations and go international. Its Amman site can process about 1,000 items daily, but WashyWash will relocate to larger premises in mid-2020, which should treble its capacity.

“We’ve built a front-end app, a back-end system and a driver app along with a full facility management system. We plan to franchise that and have received interest from many countries,” Almani said.

“People visiting Amman used our service, loved it, and wanted an opportunity to launch in their countries.”

WashyWash has received financial backing from angel investors and is targeting major European cities initially.

“An eco-friendly, on-demand dry-cleaning app isn’t available worldwide, so good markets might be London, Paris or Frankfurt,” Almani said.

 

• The Middle East Exchange is one of the Mohammed bin Rashid Al-Maktoum Global Initiatives that was launched to reflect the vision of the UAE prime minister and ruler of Dubai in the field of humanitarian
and global development, to explore the possibility of changing the status of the Arab region. The initiative offers the press a series of articles on issues affecting Arab societies.