CK deal leaves IP questions to be answered by Philips

Jed Dorsheimer comments on this year’s most talked about solid-state lighting acquisition – the purchase of Color Kinetics by Philips.

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It has been over a month since the close of this year’s largest solid-state lighting acquisition, namely the purchase of Color Kinetics by Philips. With a hefty price tag of just under $800 million (by our estimates, roughly 7x forward sales and over 10x trailing sales), this acquisition was sizable even for the multinational Philips.

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The transaction has left many industry participants curiously pondering its market implications, and investors scrambling to find the next CK-like opportunity.

What did Philips see in CK? Was it the product portfolio, distribution, or IP? Our guess is a combination of each, as well as a general commitment to the market. Remember, Philips is also leading a coalition to phase out incandescent lamps – amounting to roughly 80% of all lamps sold by our estimates - within the next 10 years.

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This article was published in the September/October 2007 issue of LEDs Magazine.

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