CVC-KKR ahead in battle for Philips' lighting business - sources

Wed Mar 11, 2015 4:27pm EDT
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By Pamela Barbaglia, Arno Schuetze and Freya Berry

LONDON/FRANKFURT, March 11 (Reuters) - A consortium of private equity firms CVC and KKR has tabled the highest bid to take control of Philips' lighting components business, though rival Bain Capital could still make a better offer, three sources familiar with the matter said.

Philips is keen to keep the bid battle going until the end of the week in an effort to get the best price for the asset which could be valued at roughly 2.5 billion euros ($2.6 billion), the sources said.

One of the sources spoke of a "significant price gap" between the two offers tabled so far, playing down Bain's ability to match or outbid its rivals.

"Unless CVC and KKR fear they're overpaying, it's their deal," this source said, who asked not to be named as the matter is confidential.

Philips' adviser Morgan Stanley aims to enter exclusive talks with one of the two sets of bidders in the coming days, wrapping up a process which started a year ago when the Dutch electronics group combined its so-called Lumileds and car lights divisions into a standalone company ahead of a spin-off.

Spokesmen for Philips, Morgan Stanley and Bain Capital declined to comment. Representatives at CVC and KKR were not immediately available for comment.

Philips, which started making light bulbs 123 years ago, has vowed to focus on higher-margin activities as earnings from its lighting operations have been squeezed in a price war with Chinese makers of light-emitting diodes (LEDs).

The Dutch electronics group makes revenues of 1.4 billion euros from its lighting operations, with the sale initially whetting the appetite of heavyweight investment firms including U.S. buyout group Clayton, Dubilier & Rice and Canadian private equity firm Onex Corp..   Continued...