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Signify to Acquire Cooper Lighting Solutions for $1.4 billion in Cash
In a blockbuster acquisition that will significantly broaden its reach into the professional lighting market, Signify, Eindhoven, Netherlands, has entered into a definitive agreement with Eaton to acquire Cooper Lighting Solutions for $1.4 billion (approx. EUR 1,270 million) in cash. Closing is subject to regulatory approvals and other customary conditions and is expected to take place in the first quarter of 2020.
Cooper Lighting Solutions, Peachtree City, GA, markets its lighting products through a well-known stable of brands in North America including Corelite, Halo, McGraw-Edison, Metalux. According to the Signify press release the Cooper business unit generated $1.7 billion in 2018 sales in 2018 – of which 84% were LED-based. The reported EBITDA was $187 million and its free cash flow was $143 million.
Eric Rondolat, CEO of Signify (right), said in the press release, “Today’s announcement confirms the strategic importance of the North American market for Signify. This acquisition will substantially strengthen our position in this attractive market. We share a genuine passion and single focus for lighting and a successful track record in innovation. We will join forces to further develop connected lighting and provide our customers with the highest level of service while optimizing operational efficiencies."
The press release also said, “Together, the two businesses will be better positioned to benefit from the growing $12 billion professional lighting market in North America, driven by the continued conversion to LED and the increased demand for connected lighting systems and controls.
“Signify and Cooper Lighting will maintain separate front offices: sales forces, agent networks, product and brand portfolios, marketing and product development teams. Both businesses will be able to strengthen their respective product portfolios, benefitting from an increased power of innovation as well as more competitive and cost-efficient offerings.
“The transaction is expected to generate substantial cost synergies of more than $60 million per year, largely to be achieved in the first three years. These tangible and well-identified cost synergies will stem from savings in the bill of materials as well as from supply chain and sourcing optimization.”
Upon closing of the acquisition, Signify will generate over 50% of its sales in the Professional Lighting segment and increase the proportion of sales generated in the Americas increases from 28% to 40%. Once the full synergy potential is achieved, Signify said Cooper Lighting is expected to deliver an adjusted EBITA margin in the low- to mid-teens.