Kingsun Optoelectronic is to acquire Lumileds with capital collected partially from surplus capital of different LED lighting business and the company’s raised funds. Kingsun Optoelectronic plans to indirectly acquire 6.15% share of Lumileds, which was span off by Royal Philips, for US$ 100 million.
Change of Fundraised Capital Application
In early 2011, Kingsun Optoeletric opened 46.8 million shares of public offering for RMB 24 (US$ 3.77) per share that raised RMB 1.12 billion (US$ 173 million) which is worth of RMB 1.06 billion (US$ 167 million) after deducting cost of issuing stock. One of the goal of the fundraising is to invest in interior LED lighting applications.
The capital was originally planned to be used in a complete manufacture lines for interior LED lighting production, including die-casting, plastic injection, machine tooling, packaging and luminaires assembly. The item was to receive investment for RMB 141 million (US$ 22.2 million).
Owing to the overall recession over the past few years, LED lighting market, especially for interior lighting also slowed down while seeing a relatively oversupply in production capacity.
The company has been developing product channeling since 2013 but currently the market is still in the initial developing phase. If the company was to accelerate fundraising in an earlier stage to enlarge production scale, the company would inevitably lead to production capacity oversupply and other consecutively expense and waste. Therefore, Kingsun Optoelectronic slowed down on the investment of the project.
The remaining fund of interior LED lighting RMB 153.4 million (US$ 24 million) will be used for the acquisition of Lumileds.
Investment in Lumileds
Lumileds is a world leading technology company that provides market leading LED lighting components, including automotive LED lighting and traditional ones. The company realized approximately US$ 2 billion in sales revenue and US$ 410 million of earnings before interest, taxes, depreciation and amortization in 2014.
Lumileds has a wide range of product lines from general lighting, automotive lighting to consumer lighting products. The general lighting product line, which realized more than US$ 400 million of sales revenue in 2014, provides a wide range of options including high power, mid-power and low-power LEDs and colored, small scale packaging, Matrix (L2), flip-chip LED and other innovative products. The sales revenue of traditional automotive lightings reached US$ 900 million while that of LED lighting’s reached US$ 300 million. Traditional automotive lighting products include halogen bulbs, HID bulbs, high efficiency bulbs, signal lights and other accessories. Automotive LED products includes high-power and mid-power lighting products. Sales revenue of consumer lighting products reached US$ 400 million in 2014 with products for tv, portable devices and computer display, including high-power, mid and low power, Matrix(2) and solid state backlight LED solutions.
