Osram to focus on semiconductors again

August 11, 2016 // By Julien Happich
Newly named Ledvance (since July 2016), Osram's general lighting lamps business is to be acquired by a Chinese consortium consisting of the strategic investor IDG, the Chinese lighting company MLS and the financial investor Yiwu, for just over €400 million.

As well as the cash transaction, the consortium will pay Osram additional royalties for license agreements of trademark rights. Through the transaction, both parties expect to benefit from a significantly larger sales and distribution network, as well as sourcing synergies.

Lighting company MLS is one of the leading companies in the area of LED-based consumer products in China. It hopes to significantly expand its position in the global lighting market through the transaction. Ledvance in return will gain improved access to the Chinese growth market as a result of this transaction.

Based on an agreement with Osram, Ledvance will continue to use the Osram and Sylvania brand names at the product level. Intellectual property rights are clearly allocated so that the consortium and Ledvance can continue to drive global innovations and product development.

“The transaction is good news for Ledvance’s employees,” said Michael Knuth, Vice Chairman of the Supervisory Board of Osram Licht AG and Speaker of the IG Metall trade union in the German state of Bavaria. “The consortium will uphold the existing agreements with the works council and IG Metall. Ledvance’s global headquarters will remain in Garching, Germany.

The company will therefore remain an entity under the principles of German codetermination. The consortium consists of reliable and conscientious entrepreneurs. During our negotiations, the involved companies have furthermore shown great respect for the accomplishments and experience of the Ledvance team.”

Osram expects to remain a strategic supplier of LED chips to Ledvance, stating that in connection with the transaction, Osram and MLS entered into a strategic supply agreement by which MLS intends to purchase an annual order of LED chips.

Those chips will come from a new plant being built in Kulim, Malaysia.

The transaction shrinks Osram GmbH considerably, helping the company focus on semiconductors again. In the 2015 fiscal year general lighting amounted to around 40 percent of Osram turnover or approximately €2 billion.

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