Dutch electronics conglomerate Royal Philips Electronics announced Monday it was buying U.S. light-emitting diode [LED] maker Genlyte Group for $2.7 billion, its largest acquisition in dollar terms ever. That comes out to $95.50 a share in cash, representing a 52% premium to Friday's closing price of $62.67. According to the press release, the deal, which is expected to be completed in Q1 2008, will create the "#1 lighting company in North America." Philips Lighting's CEO Theo van Duerson believes that, "Besides growing our presence in North America, this deal deepens our contacts to end users, such as wholesalers, contractors, architects and lighting designers, helping us speed up the market rollout of more energy-efficient lighting and the introduction of new lighting technologies, like solid state lighting.” Genlyte's board unanimously approved the offer, and recommends shareholders vote in favor of the buyout. During the 12-month period ending Sept. 2007, Genlyte had sales of $1.6 billion with an EBITA margin of 14.9%. Genlyte's shares are down nearly 20% YTD; PHG's are up more than 12% YTD including a 6.9% gain in Friday trading. Earlier this year, Philips acquired North American LED maker Color Kinetics (full summary). Philips has as much as 20 billion euros ($29.7 billion) set aside for acquisitions, dividends and buybacks through 2010. The company has spent 6.5 billion euros on acquisitions since August 2005, including its latest announced purchase of Genlyte.
Commentary: Philips to Acquire Color Kinetics: What's An LED Investor To Do? • Light-Emitting Diodes Stocks Get Some Respect • Koninklijke Philips Electronics To Buy Color Kinetics For 14% Premium • Genlyte Group: Capture the Changing Illumination Industry
Stocks to watch: PHG, GLYT
Competitors: GE, SNE, MC
Earnings call transcript: Koninklijke Philips Electronic Q3 2007
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