General Electric (GE) since last November has been seeking companies that might be interested in buying its lighting business. In March, it was rumored Chinese lighting companies MLS Co. and Foshan Electrical and Lighting Co. were seeking financial supports for bidding GE’s assets.
LEDinside learnt from a source that GE is going to submit a tender to sell its assets— its general lighting unit and Current, powered by GE—as a part of its restructuring. Those assets is worth around USD 600-800 million, financial institutions estimate. The final price will settle based on the term of GE’s trademark and its market coverage.
Given that GE’s lighting business only contributes to a small proportion of the company’s overall revenue, the American electric conglomerate decided to divest these “non-core” assets some time ago. However, the plan did not proceed as fast as the market expected in one part because the estimated selling price was relatively high and in the other part because GE itself was hesitant about it.
The selling of GE’s lighting business finally began under former GE CEO Jeff Immelt. In order for buyers to take over its lighting business, GE went through year-long asset restructuring and divestiture. Currently, there are six GE lighting plants.
As GE lighting is still a strong brand in North America, it is expected a number of Chinese LED and lighting firms will scramble for the sale. In this regard, LEDinside looked into the Chinese lighting industry and found out a few firms that might be interested in buying GE’s assets.
1) Conventional Lighting
Shanghai Felio Acoustics Co., Ltd.
As the parent company of Shanghai Yaming Lighting, SH Felio Acoustics has a dream to build a global lighting brand. In 2015, the company acquired SYLVANIA from Havells Holdings as the first step to realize its plan. Nonetheless, the market coverage and distribution channels it gained from the acquisition are only limited in regions such as India and Europe. In North America, the ownership of the product brand SYLVANIA belongs to OSRAM since 1993. If Felio Acoustics won the sale from GE, the market coverage and distribution channels GE has developed in North America would be the last piece of puzzle.
Topstar and Yankon
For traditional lighting OEMs like Topstar and Yankon, they have rich experience in manufacturing lighting products for clients. However, they are certainly not going to be satisfied with the relatively low profits from their manufacturing services. They are also looking to obtain the channels from GE.
The fundamental difference between the two companies lies in their identities. In the past, Topstar mainly served GE and is thus more familiar with GE’s lighting business. Once it purchases the assets from GE, it is easier for the business sold to blend in. As for Yankon, it is a major OEM for Philips Lighting. Yankon would have to sort out the partnership with Philips Lighting if it bought GE’s assets.
2) LED Lighting
San’an focuses on the fabrication of LED chips all along. Yet, with its continuously expanding capacity, the company has to find a way to digest it. Even if it has invested in LED packaging companies and allied with a few downstream firms, it still does not have enough control over distribution channels and end-markets. In spite of solid finance and LED chip manufacturing capability, San’an does not seem to fully succeed in building its brand. This is also the essential difference between San’an and Samsung. Through the acquisition, not just the distribution channels, San’an is also able to enjoy GE’s patents.
MLS has successfully procured LEDVANCE and the brands LEDVANCE as well as OSRAM SYLVANIA in North America. The lighting giants knows well the value of a multinational lighting brand with a history of over 100 years. Although it has the two well-known brands in North America, they are more consumer-oriented. MLS would be able to tap into the public lighting area and top the lighting industry in North America if it bought GE’s assets.
3) Venture Capital Organizations
Never let a good chance slip away twice. GSR Ventures was once blocked by the US government from buying Lumileds; however, that does not seem to intimidate it. Among the LED companies GSR Ventures has invested in, only a few of them are downstream manufacturers. If GE lighting became one of them, it would be able to integrate with the other invested companies to form a complete LED lighting supply chain.
IDG Capital currently holds a proportion of shares of companies including HC Semitek, MLS, and Honglizhihui Group (Honglitronic). In particular, it made big gains from the acquisition of LEDVANCE. It surely will not give up this juicy deal. This time, if GE lighting and Current ended up in the pocket of IDG, it would make a fortune out of the deal, whether to later on merge them with listed lighting companies or resell them.