Philips to buy lighting maker Genlyte

By Foo Yun Chee

AMSTERDAM (Reuters) - Philips Electronics NV (PHG.AS) (PHG.N) has agreed to buy U.S. lighting maker Genlyte Group Inc GLYT.O for $2.7 billion in a deal that would make Philips the top lighting company in North America.

Philips -- the world's biggest lighting maker, a top-three hospital equipment maker and Europe's biggest consumer electronics producer -- said it would launch a cash offer of $95.50 per Genlyte share within five business days.

Philips would be paying a premium of 52 percent to Genlyte's closing price of $62.67 on Friday. Genlyte's board is backing the bid.

Genlyte shares jumped $31.73, or 51 percent, to $94.40 in afternoon trading on the Nasdaq. Shares of rival Cree Inc (CREE.O) were up $2.92 or 14 percent to $24.00, while lighting fixture maker Acuity Brands Inc (AYI.N) was up $2.48 or 7 percent to $37.96.

The deal would strengthen Philips' hand against rival General Electric Co (GE.N) on GE's home turf. GE said last month it would restructure its lighting business, in which it has already sold plants and cut thousands of jobs, hurt by a steep decline in sales of the traditional incandescent household light bulb.

GE said it had invested $200 million in the last four years on energy-efficient lighting and would close further plants, affecting another 1,425 jobs at its lighting division.

Philips shares were down 0.3 percent to 28.36 euros. Earlier, they hit a one-week high at 29.10 euros.

Genlyte would make a perfect strategic fit for Philips, allowing the Dutch company to push into the U.S. energy-saving lighting market, said Rabo Securities analyst Frits de Vries.

Philips would be paying 1.68 times Genlyte's forecast sales, said SNS Securities analyst Victor Bareno. This compares with a multiple of 1.5 for Belgian lamp and light fitting maker Partners in Lighting International, which Philips bought in February.

"Philips is paying a full price. We believe this price can be justified given Genlyte's higher margins," Rabo's de Vries said.

Genlyte, the second-ranked North American lighting fixtures maker, had an earnings before interest, tax and amortization (EBITA) margin of 14.9 percent in the 12-month period to September 2007.

Philips, whose lighting business contributes about a fifth of the group's total sales, has been fast to push into new technologies, particularly energy-saving lighting.

"People are a lot more interested in green buildings," Genlyte Chief Executive Larry Powers said on a conference call. "It's starting to catch on, and hopefully it's going to start turning into some nice orders over time."

Philips bought U.S. energy-efficient LED maker Color Kinetics in June for 592 million euros.

SYNERGIES