The Dutch Philips Group warned on Monday that its plans to sell the Lumileds lighting division to the Chinese consortium for $3.3 billion could be hampered because the US authorities opposed the deal on the grounds of national security.
Lumileds is the world's leading manufacturer of lighting equipment. Philips announced in March this year that it will sell 80% of its equity to Go Scale Capital, a fund formed by a combination of venture capital and oak investment partners.
Philips said on Monday that the deal was unexpectedly opposed by the US Foreign Investment Commission (CFIUS), which has oversight of Lumileds' subsidiary in San Jose, California.
Lumileds' sales and earnings are mostly from its automotive lighting business, but the company is also developing light-emitting diodes (LEDs) in San Jose and has a portfolio of lighting patents.
The US Foreign Investment Commission is a federal government cross-sector review body led by the US Treasury Department, including the US Department of Justice, the Department of Homeland Security, the Department of Commerce, the State Department, the Department of Defense, and the Department of Energy. The committee has the power to review foreign transactions ("regulated transactions") to control transactions of US companies and to determine the impact of transactions on US national security.
Philips CEO Frans van Houten said in a telephone interview with Reuters that CFIUS’s opposition “is completely unexpected... after all, we are only producing LEDs for simple lighting purposes.†He said that Philips will try to calm the committee’s Worried and still believe that the transaction will eventually be completed successfully.
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