Monday, November 26, 2007

Philips to Acquire Genlyte for $2.7 Billion in Cash

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 bid is 52 percent more than Louisville, Kentucky-based Genlyte's closing price of $62.67 on Nov. 23.

The deal will make Philips the biggest lighting company in North America. Chief Executive Officer Gerard Kleisterlee is using proceeds from selling the semiconductor holdings to bolster the medical and lighting divisions and return cash to shareholders. Genlyte will help the Amsterdam-based company 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 Philips spokesman, said the deal was the company's largest acquisition ever in dollar terms.

Philips rose 29 cents, or 1 percent, to 28.73 euros as of 2:03 p.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 47 percent to the equivalent of $91.94 at 1:38 p.m. on the Frankfurt exchange, compare with the last close in the U.S.

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