March 15, 2015 / 11:46 AM / 5 years ago

Surprise Asian consortium interested in Philips lighting -sources

FRANKFURT, March 15 (Reuters) - A surprise Asian consortium has emerged in the auction for Philips’ lighting components business worth roughly 2.5 billion euros ($2.6 billion), two sources familiar with the matter said.

Chinese LED startup Lattice Power, working with investors GSR Ventures and Singapore state fund Temasek, has expressed interest in the business, a move that could potentially foil the chances of rival bids from buyout groups, they said.

“They have put in a last-minute bid,” one of the sources said, adding that it is expected to have been competitive as it would otherwise would have no chance at this stage of the auction.

“It looks like the Chinese are there. But it is unclear if their chances are very big,” another source said.

Philips’ adviser Morgan Stanley aims to enter exclusive talks with one of the bidders early next week, wrapping up a process which started a year ago when the Dutch electronics group combined its so-called Lumileds and car lights divisions into a standalone company.

A consortium of private equity firms CVC and KKR this month tabled a bid seen as leading, with runner-up Bain Capital having had the chance the hike its own offer, sources familiar had said.

Spokespeople for Philips, CVC, KKR and Bain Capital declined to comment, while representatives for Lattice, GSR, Temasek and Morgan Stanley were not available for immediate comment.

Lattice Power, a small company which last year secured $80 million in funding by Asia Pacific Resources Development Investment, already has some connection to Philips, as it made James Haworth, a former Philips executive, the head of its U.S. operations.

Philips, which started making light bulbs 123 years ago, has vowed to focus on higher-margin activities under pressure from Chinese makers of light-emitting diodes (LEDs).

In 2014, Philips’ Lumileds/Automotive business posted earnings before interest, tax and amortisation (EBITA) of 172 million euros on sales of 1.42 billion.

Peers such as Hella, Cree and Acuity trade in a range of 6.6 to 13.4 times expected earnings before interest, taxes, depreciation, and amortisation.

$1 = 0.9537 euros Reporting by Arno Schuetze

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