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Philips to buy Genlyte for 2.7 billion dollars

Royal Philips Electronics  NV, the world's largest lighting maker, said Monday it will pay US$95.50 (EUR64.77) a share in cash for Genlyte Group Inc., in a management-agreed takeover that values the U.S. company at US$2.7 billion (EUR1.83 billion).

Genlyte's shares closed at US$62.67 Friday, with Philips' offer representing a 52 percent premium. Louisville, Kentucky-based Genlyte makes lighting fixtures for lights used mostly by companies.

Amsterdam-based Philips said Genlyte had sales of around US$1.7 billion in the 12 months ended Sept. 30.

Philips said the acquisition would strengthen its position in energy-efficient lighting, and will allow it to surpass rival General Electric Co. as the largest lighting company in North America.

Theo van Deursen, head of Philips' lighting division, said Genlyte's distribution channels were more important to Philips than its manufacturing technology.

Philips has invested heavily in developing energy-saving bulbs, but has so far been more successful in Europe than in the United States in marketing them.

"It's very important that (Genlyte) are in contact...with the lighting designers and architects, which helps us a lot in bringing new products to the market," Van Deursen said on a conference call.

Van Deursen said Philips hopes to sell new products, especially LEDs, to Genlyte customers.

LEDs, or light emitting diodes, use computer chips to produce light, rather than the glowing filaments used in traditional incandescent bulbs or the gas used in fluorescent bulbs. Philips expects LEDs to gradually replace both incandescent and fluorescent lights in the coming decade, as they are more energy-efficient, they last longer, and the cost of producing them is expected to fall rapidly.

Philips said it expects to complete the deal in the first quarter of 2008, pending approval by shareholders and regulators.

Van Deursen said Philips believed it could boost Genlyte's sales by around US$30 million annually with new product offerings, and cut costs by around the same amount by helping the company with purchasing and distribution.

He said Philips did not plan significant cuts to Genlyte's 6,700 employees, of whom 6,500 are in the United States: they are joining one of Philips' fastest-growing businesses.

Philips shares rose 1.7 percent to EURO 28.91 (US$42.63) in Amsterdam.

The Genlyte buy, if successful, will be one of a spate of recent lighting acquisitions for Philips.

Most notably, Philips bought Boston, Massachussetts-based Color Kinetics, an LED maker, for US$688 million in June, and in 2005 it bought Agilent Technology Inc.'s half of their LED joint venture, LumiLeds, for US$1 billion.

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