Philips says that the proposed transaction builds on its earlier acquisition of Color Kinetics and provides the company with a leading position in the North American luminaires (lighting fixtures) market.
The deal will also provide Philips with a platform for further profitable growth by building on Genlyte’s extensive presence among lighting customers in North America to speed up the adoption of energy-saving technologies, including solid-state lighting.
Theo van Deursen, CEO of Philips Lighting, said: "Today’s announcement is another major step for Philips in executing its strategy to establish a global leadership position as a provider of energy efficient, solid-state lighting solutions in key application areas. It follows on our recent acquisitions of Color Kinetics, TIR Systems, Partners in Lighting International, as well as our earlier investment to acquire full ownership of Lumileds.
"Besides growing our presence in North America, this deal deepens our contacts to end users, such as wholesalers, contractors, architects and lighting designers, helping us speed up the market rollout of more energy efficient lighting and the introduction of new lighting technologies, like solid-state lighting."
Based in Louisville, Kentucky, USA, Genlyte designs, manufactures and sells lighting fixtures, controls and related products for a wide variety of applications, including solid state lighting.
In the year ending September 2007, Genlyte had revenues of around $1.7 billion. Genlyte's lighting products are sold under many different brand names (see below). Several brands have launched LED-based products, notably Ardee Lighting and Lightolier, which had a wide range of LED products at Lightfair 2007 (see our report).
Just under 90% of Genlyte’s 2006 revenues were related to commercial and industrial applications, with the remainder for high-end residential applications. A leader in the North American construction luminaires market, Genlyte sells to distributors and electrical wholesalers. The company’s products are also promoted through architects, engineers, contractors, and building owners. Genlyte employs approximately 6700 people.
Larry Powers, Chairman, President and CEO of Genlyte Group Incorporated said, “Philips is shaping the future of the lighting industry by building up an extensive portfolio of innovative, green lighting. Genlyte has also established a reputation for developing innovative new products utilizing the latest in lamp and ballast technologies.
"We believe joining with Philips is in the best interest of our shareholders, customers, vendors and employees, and that our combined resources will produce the best possible entity for competing, growing and creating value for our customers."
The board of directors of Genlyte has unanimously approved the transaction, and will unanimously recommend that Genlyte shareholders accept the offer and tender their shares of Genlyte.
Over a 12-month period ending in September 2007, Genlyte had sales of approximately USD 1.6 billion with an EBITA margin of 14.9%. Following completion of the acquisition, Philips expects Genlyte’s revenue growth to continue outpacing the market, as Philips uses Genlyte’s market presence as a platform for introducing newer, green products into the North American market.
Philips’ plan to extend Genlyte’s activities beyond North America will also contribute to growth. Following the integration of Genlyte, Philips expects to benefit from leveraging economies of scale in purchasing of materials and services as well as Genlyte’s expertise in outsourcing and streamlining of manufacturing activities, contributing to margin expansion.
The acquisition is structured as an all cash tender offer by Philips for all of the issued and outstanding shares of Genlyte to be followed by a merger in which each remaining untendered share of Genlyte will be converted into the same USD 95.50 per share price paid in the tender offer. The tender offer is expected to commence within 5 business days and is not subject to a financing contingency.
The acquisition will be effected pursuant to a merger agreement and is subject to the terms and conditions of the merger agreement. These include the tender of a majority of the outstanding Genlyte shares on a fully-diluted basis and other customary conditions. The transaction is expected to close in the first quarter of 2008, upon which Genlyte will be integrated into the Luminaires business group within Philips Lighting.
Genlyte sells lighting and lighting accessory products under the major brand names of Alkco, Allscape, Ardee, Canlyte, Capri/Omega, Carsonite, Chloride Systems, Crescent, D'ac, Day-Brite, Gardco, Guth, Hadco, Hanover Lantern, High-Lites, Hoffmeister, Lam, Ledalite, Lightolier, Lightolier Controls, Lumec, Morlite, Nessen, Quality, Shakespeare Composite Structures, Specialty, Stonco, Strand, Thomas Lighting, Thomas Lighting Canada, Vari-Lite, Vista, and Wide-Lite.