Signify pays $1.4 billion for Cooper
AMSTERDAM: Signify, the Dutch-based lighting company, has agreed to buy US firm Cooper Lighting Solutions from Eaton Corp for $1.4 billion in cash to boost its presence in North America.
The acquisition is the largest by Signify, the world’s largest lighting maker that was formerly known as Philips Lighting, since it was spun off from Royal Philips NV in 2016.
“The deal aims to boost Signify’s position in the global professional lighting market, where it is the No. 2 player and in North America, where it suffers from a lack of scale and competes with rivals like Acuity Brands Inc,’’ chief financial officer Stephane Rougeot said.
“The rationale from a strategy standpoint is to get a much stronger market position in North America in professional,” he said in a telephone interview.
“With Cooper we are getting a very large player in North America professional. They have great market positions, they have a large agent network, they have very deep customer relationships, they have great brands over there.”
The deal is expected to close in the first quarter of 2020 pending regulatory approvals.
Peachtree City, Georgia-based Cooper Lighting Solutionst sells professional lighting and controls under the Corelite, Halo, McGraw-Edison and Metalux brands.
It reported 2018 sales of $1.7 billion, and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $187 million.
ING analyst Marc Hesselink, who rates Signify shares at “hold”, said the deal was a “good strategic fit for Signify and price paid seems reasonable.”
Still, Cooper would not add technology or new capabilities to Signify’s portfolio and the deal would not really change the growth or margin profile of the company, he said.
Signify said it intended to keep dividends steady or increase them after the acquisition, but its main focus would be to reduce debt of the combined company from two times net debt to EBITDA to one time in the next three years.
“During that time Signify will make further merger and acquisition activity less of a priority,’’ Rougeot said.