Osram sells lamps business into China

The Supervisory Board of OSRAM Licht AG (Osram) approved the sale of the general lighting lamps business. The buyer of the business known as Ledvance is a Chinese consortium consisting of the strategic investor IDG Capital Partners (IDG), the Chinese lighting company MLS Co., Ltd. (MLS) and the financial investor Yiwu State-Owned Assets Operation Center (Yiwu). The purchase price amounts to more than EUR 400 million. Osram will additionally receive payments for license agreements of trademark rights. The transaction is subject to certain closing conditions, regulatory approval by the relevant authorities. The transaction is expected to close in the course of fiscal 2017. In connection with the transaction, Osram and MLS entered into a strategic supply agreement, by which MLS intends to purchase an annual order of LED chips from the new plant in Kulim, Malaysia, once production has started. “The transaction is a milestone in Osram’s alignment towards a high-tech player in the lighting industry,” said Olaf Berlien, Chief Executive Officer of OSRAM Licht AG. “We sought and have found the best owner for Ledvance. Within the consortium, MLS is a growth-oriented lighting company with unique expertise and a strong position in the important Chinese market.” “The new ownership strongly supports the Ledvance strategy and will lead to a number of advantages for Ledvance and our customers. We will gain access to a more cost efficient supply chain for LED Lamps and luminaires and can continue to uphold our quality standards. Furthermore, we will strengthen our sales opportunities in Asia and especially in China,” said Jes Munk Hansen, CEO of Ledvance. Jes Munk Hansen and the management team of Ledvance will remain in place following the closing of the transaction. Works agreements and social plans remain in place The transaction is focused on growth and will not induce additional personnel measures due to a limited overlap in organizational structures between the involved companies. The agreements and principles safeguarding the future that Osram and the employee representatives agreed upon remain in place. Consequently, works agreements and social plans will not be changed until the end of 2018. The entire collective agreement and dismissal protection for the German workforce are preserved. “The transaction is good news for Ledvance’s employees,” said Michael Knuth, Vice Chairman of the Supervisory Board of OSRAM Licht AG and Speaker of the IG Metall trade union in the German state of Bavaria. “The consortium will uphold the existing agreements with the works council and IG Metall. Ledvance’s global headquarters will remain in Garching, Germany. The company will therefore remain an entity under the principles of German codetermination. The consortium consists of reliable and conscientious entrepreneurs. During our negotiations, the involved companies have furthermore shown great respect for the accomplishments and experience of the Ledvance team.”