Philips to buy US lighting maker Genlyte for $2.7 bn

Philips Electronics has agreed to buy US lighting maker Genlyte for $2.7 billion...

Philips Electronics has agreed to buy US lighting maker Genlyte for $2.7 billion, making it the top lighting company in North America and sending its shares to a week high. Philips, the world’s biggest lighting maker, said on Monday it will launch a cash offer of $95.50 per Genlyte share within five business days.

Philips is paying a premium of 52 per cent to Genlyte’s closing price of $62.67 on Friday and Genlyte’s board is backing the bid. Philips’ shares were up 1.6 per cent to 28.90 euros in intra-day trading, outperforming a 1.2 per cent rise in Amsterdam’s blue-chip index.

The deal allows the Dutch company to push into the energy-saving lightings market in the US, said Rabo Securities analyst Frits de Vries. Philips is paying 1.68 times Genlyte’s forecast sales, said SNS Securities analyst Victor Bareno. This compares with a 1.5 times sales multiple for Belgian light fitting maker Partners in Lighting International, which Philips bought in February.

North America’s second-ranked lighting fixtures maker Genlyte had an earning before interest, tax and amortisation margin of 14.9 per cent in the 12-month period to September 2007. The Kentucky-based company had a turnover of about $1.6 billion in the same period.

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