AMSTERDAM (Reuters) - Philips Electronics said it would acquire U.S. lighting maker Color Kinetics for about 592 million euros ($793.5 million) to boost its role in the energy-efficient light-emitting diode (LED) business.
The Dutch company said on Tuesday the deal valued Color Kinetics at $34 per share, with an implied enterprise value of 516 million euros which includes about 76 million euros of cash on the balance sheet as of March 31.
Philips shares were up 0.06 percent at 31.44 euros by 0810 GMT, compared with a 0.04 percent rise in the blue-chip index (.AEX. Analysts said the company was paying a hefty premium for the acquisition of the Boston-based maker of lighting systems based on LED technology.
“We believe that the LED industry has a lot of growth potential, but paying eight times estimated 2007 enterprise value/sales (in the absence of profit for the time being) looks very expensive,” Petercam analyst Eric de Graaf wrote in a note.
He said Philips was paying a 15 percent premium to Color Kinetics’ closing price on Monday at $29.79.
Color Kinetics had sales of about $65 million in 2006. Based on an annual growth rate of 31 percent in the last six years, Color Kinetics should have revenues of $85 million this year, the chief executive of Philips Lighting, Theo van Deursen, told reporters on a conference call.
The company expects annual growth of 30 percent in the solid state lighting (SSL) module market. The lighting unit accounted for a quarter of the group’s first-quarter sales.
“This (acquisition) will further enhance Philips’ position to lead the future global shift to more energy-efficient lighting solutions,” the world’s biggest lighting maker said in a statement.
Philips is also a top three hospital equipment maker and Europe’s biggest consumer electronics producer.