Dutch electronics giant Philips on Tuesday said it was selling a majority stake in its LED and car lighting arm to a consortium led by China-based GO Scale Capital investment fund in a deal worth $2.8 bn.
"Philips today announced that it has signed an agreement with a consortium led by GO Scale Capital through which they will acquire an 80.1 percent interest in Philips' combined LED components and automotive lighting business," the Amsterdam-based Philips said.
"Philips expects to receive cash proceeds, before tax and transaction related costs, of approximately USD 2.8 billion (2.5 billion euros," it said in a statement.
After the sale, to be completed in the third quarter of the year, Philips will retain a 19.9 percent share in the business, it added.
Philips last year announced it would split in two, separating its healthcare-lifestyle arm from its historic lighting section in a move to streamline the 120-year-old business.
Part of the split included creating a separate company for some of its lighting activities, particularly for its LED and car lighting branches, to be branded under the name of Lumileds.
"We are convinced that together with GO Scale Capital, Lumileds can grow further, attract more customers and increase scale as a stand-alone company," Philips chief executive Frans van Houten said on Tuesday.
"We feel very comfortable to hand over 80 percent of the shares... to this consortium which has a proven track record," Van Houten told journalists in an early-morning conference call.
Lumileds is a leading supplier of general, car and consumer lighting components and operates in 30 different countries, employing some 8,300 people world-wide.
Founded in 1891 in the southern Dutch city of Eindhoven, Philips itself employs around 112,000 people globally.
GO Scale Capital is a new investment fund sponsored by GSR Ventures and Oak Investment Partners with offices in Beijing, Hong Kong and Silicon Valley.
It's current investments include US-based Boston Power, which makes electric vehicle batteries and China-based Xin Da Yang which produces electric vehicles.
"GO Scale Capital will focus on expanding Lumileds' opportunities by investing in its global centres of operation and in the fast growing general lighting and automotive industries," GO Scale Capital chairman Sonny Wu said in Tuesday's statement.
"Together with a customer base including the likes of BMW, Volkswagen and Audi, we expect to see significant growth and unparalleled inroads into new opportunities such as electric vehicles," Wu said.