Philips to acquire Color Kinetics to strengthen leading position in Led lighting systems, components and technologies
* Combination strengthens Philips’ LED portfolio, technology base and intellectual property position
* Color Kinetics’ application know-how in combination with Philips’ global market presence will accelerate Philips Lighting’s growth in Solid State Lighting
* Builds on Philips’ Lumileds and TIR Systems acquisitions in the sector
* Purchase price corresponds to a Color Kinetics enterprise value of approximately EUR 516 million
Amsterdam, The Netherlands and Boston, Massachusetts, USA - Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced it has reached an agreement with Color Kinetics Incorporated (NASDAQ: CLRK) under which Philips will acquire all of the outstanding shares of Color Kinetics for USD 34 per share, or a total consideration of approximately EUR 592 million to be paid in cash upon completion. The implied enterprise value of Color Kinetics in this offer is EUR 516 million, taking into account approximately EUR 76 million of cash on balance sheet as of March 31, 2007. This transaction is subject to the terms and conditions of the merger agreement and to the approval of Color Kinetics’ shareholders, as well as to customary regulatory clearance, and is expected to close in the second half of 2007.
Color Kinetics, based in Boston, Massachusetts, USA, is a leader in designing and marketing innovative lighting systems based on Light Emitting Diode (LED) technology. The company has a broad technological portfolio covering important patents relating to intelligence and control technology for LED lighting. Color Kinetics also has in excess of 15,000 professional installations worldwide and an array of large, industrial customers in professional channels.
This merger builds on the acquisition of Lumileds in 2005, through which Philips ensured a leading position in high-power LED dyes, and on the recent acquisition of TIR Systems, which provided Philips with a strong line of fully-integrated Solid State Lighting (SSL)-modules used to deliver integrated lighting products to fixture manufacturers. With Color Kinetics, Philips will become a leader in SSL luminaires, establishing a strong presence in all aspects of the SSL value chain. This will further enhance Philips’ position to lead the future global shift to more energy-efficient lighting solutions, using LED sources.
“This acquisition uniquely positions Philips as a major player in the fast-growing SSL business with technology, expertise and intellectual property in all parts of the value chain of integrated LED-based lighting solutions,” Theo van Deursen, Chief Executive of Philips’ Lighting division, said. “The technological platform obtained through this acquisition will serve as a springboard for Philips to further create sustainable value through making innovative LED lighting solutions widely available. We admire Color Kinetics’ expertise, which they built up in only 10 years of existence, and we will foster the company’s creative and entrepreneurial flair in the future while boosting growth by integrating it into the global lighting leader.”
“We have long said that LEDs are the future of illumination - not a passing novelty - and we’ve supported that view with unwavering focus on the research and development of new technologies, sales channels, partnerships and industry initiatives to make it a reality. Today we announce our biggest and most significant step towards putting our core technology and IP at the heart of every future application of intelligent LED lighting,” said Bill Sims, President and CEO, Color Kinetics. “We believe that joining Philips, the global lighting leader, is in the best interest of our shareholders, customers, partners, and employees, and that our combined resources will produce the best possible entity to drive the LED lighting revolution forward.”
Color Kinetics had 2006 sales of approximately USD 65 million. The company’s sales have grown at a compound annual growth rate of 31% in the period 2001-2006. Operating margins are expected to increase as the company benefits from economies of scale. In addition to its product sales, Color Kinetics has a fast-growing licensing income stream that adds significantly to its value.
The market for SSL is at an inflection point for growth as the performance of LEDs measured in lumens per watt is rapidly becoming competitive with traditional light sources. While the market for SSL has up until now been driven by the application of color LEDs, technology in white light has improved significantly, which Philips expects will cause market growth to increase substantially going forward. Independent market sources project that the SSL addressable market will reach USD 20 billion to USD 30 billion in 2025 and is growing currently by approximately 30% per year.
Through this merger Philips and Color Kinetics expect to further accelerate growth in this area of the lighting market. Philips and Color Kinetics will drive to stimulate the speed of adoption of LED technologies and applications in the industry. By enabling Color Kinetics’ innovative systems to be distributed and sold globally, the benefits of LED will be brought to a far larger market more quickly.
Additional information Color Kinetics
Images - Products
Color Kinetics offers intelligent LED lighting systems for indoor and outdoor applications in a multitude of sizes and shapes, from wall washing lighting fixtures to cove accents to submersible lighting solutions, complete with controller and power supply options. See two of their product examples below.
iColor® Accent Powercore is ideally suited for creating seamless columns of color and color-changing effects. Its precise level of control allows the fixtures to run video, graphics and intricately designed effects in a host of architectural and entertainment settings.
iColor® Accent Powercore
Color Kinetics eW™ Flex SLX is a versatile strand of 50 white LED nodes that apply Chromasic®-based intelligence for individual control. The durable, flexible form factor allows for dynamic points of white light to be installed across nearly any interior or exterior surface – walls, ceilings, floors, and three-dimensional sculptures and set pieces.
Color Kinetics’ customers, OEM and Licensing partners break boundaries in their forward-looking use of light to transform spaces, build brands, and incite imagination. The three showcase examples below speak for themselves.
Costa Concordia joined the fleet of Italy’s Costa Cruise line in 2006, offering all the comforts of a floating palace with meticulous detail to its stylish design. It is the largest and longest ship among the fleet, and its visually striking interior features multiple applications of Color Kinetics LED lighting technology.
Philadelphia’s historic Boathouse Row received a high-tech lighting makeover. Made possible by Color Kinetics’ intelligent solid-state lighting technology, the new lighting system replaced a 30-year-old incandescent system that required frequent and costly maintenance. By installing the LED-based system, the Fairmount Park Commission expects to save approximately US$57,000 in annual operating costs.
Philadelphia’s historic Boathouse Row
In December 2006 Color Kinetics added another global landmark to its growing list of prominent installations: the London Eye, which is visible from more than a mile away. It was previously lit by fluorescent tubes that proved costly to maintain, and required the manual installation of gels to produce colored light for special events. Color Kinetics was approached to replace this system with an LED-based alternative.
the London Eye
Japan’s prestigious Takarazuka University of Art and Design facilitates traditional art and design education while encouraging new opportunities made possible by on-going technological innovation. To best symbolize its focus on the marriage of traditional art and modern innovation, the approximately 200-foot high building makes use of the latest advancements in intelligent LED illumination from Color Kinetics Japan to distinguish its presence against the Osaka city skyline.
Takarazuka University of Art and Design
For more information, please contact:
Arent Jan Hesselink
Philips Corporate Communications
Tel +31 20 59 77415
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