Philips to Acquire Genlyte for $2.7 Billion in Cash

Philips to Acquire Genlyte for $2.7 Billion in Cash (Correct)
By Marcel van de Hoef
(Corrects spelling of spokesman's name in fifth paragraph.)
Nov. 26 (Bloomberg) -- Royal Philips Electronics NV, the world's biggest maker of light bulbs, agreed to buy lighting- fixtures manufacturer Genlyte Group Inc. for $2.7 billion, its largest purchase ever.
Philips will pay $95.50 a share in cash, it said today in a PRNewswire statement. The offer is 52 percent above Louisville, Kentucky-based Genlyte's closing price on Nov.23 of $62.67.
Chief Executive Officer Gerard Kleisterlee is using proceeds from selling Philips' semiconductor holdings to bolster the medical and lighting divisions and return cash to shareholders. Buying Genlyte will help Amsterdam-based Philips boost sales of systems using high-power light-emitting diodes, or LEDs.
``The big advantage is that this business is actually making money,'' said Eric de Graaf, an Amsterdam-based analyst at Petercam who recommends investors ``hold'' Philips shares. ``This fits the strategy and is a completely logical acquisition if you look at cash available.''
Jayson Otke, a senior press officer at Philips, said the deal was the company's largest acquisition ever in dollar terms.
Philips rose 40 cents, or 1.4 percent, to 28.84 euros as of 10:35 a.m. in Amsterdam trading. Before today, the stock had fallen less than 1 percent this year, in line with the drop in the benchmark Amsterdam Exchanges Index.
Genlyte rose 99 cents, or 1.6 percent, in Nasdaq Stock Market trading on Nov. 23. The shares have dropped 20 percent this year.
Acquisitions, Dividends and Buybacks
The company, whose systems are used to illuminate office buildings, shops, streets, factories and gas stations, had sales of about $1.6 billion in the 12 months ended in September. Earnings before interest, tax and amortization as a percentage of sales was 14.9 percent.
Philips has said it has as much as 20 billion euros ($29.7 billion) available for acquisitions, dividends and buybacks in the next three years. The company has completed or announced 6.5 billion euros of takeovers since August 2005, including Genlyte.
Genlyte's board will recommend the offer to its shareholders, Philips said in the statement.
Philips anticipates completing the deal in the first quarter of next year. The takeover will make it the biggest North American lighting company, according to the statement.