Osram announced Wednesday it would be selling its 13.5% stake in Foshan Electrical and Lighting (Foshan Lighting) to a subsidiary of Guangdong Rising Assets Management (GRAM) for more than EUR 350 million (US $392.51 million).

“By selling its stake in Foshan Lighting, Osram’s goal is to optimize its lighting business value through this transaction,” analyzed Roger Chu, Director, Research Division of LEDinside. “The German company intends to sell its different lighting businesses independently to maximize each business sections value.”

The German lighting manufacturer’s press release pointed the deal it sealed with GRAM’s subsidiary is at a premium of 30% of Foshan Lighting’s current share price. Foshan shares opened at RMB 11.82 (US $ 1.85) each this morning on China’s A-shares market, and closed at 10.02% higher at around RMB 12.62, according to statistics compiled by Bloomberg. 

Osram decision to sell its stake in Foshan Lighting will actually work in the Chinese lighting manufacturers favor, said Chu. “If Osram clung on to its stake in Foshan Lighting, there is the potential that the new Foshan Lighting shareholder would be acquiring both companies lighting business,” he explained. “This is a situation that Foshan Lighting would like to avoid, especially if the new investor is one of its competitor.”

Following the transaction GRAM’s subsidiary Guangdong Electronics Information Industry Group (GEIIG) will become Foshan Lighting’s largest shareholder, reported several Chinese media including Sina.

GEIIG is an independent company under GRAM that has a registered capital of RMB 462 million. Its main businesses covers electronic telecommunications technology, electronics manufacturing, R&D, sales, and other electronic messaging and computing operations. The company’s computing technology, services, equipment and rental services.

Earlier in late April 2015, Osram announced plans of splitting its traditional luminaire Classic Lamps & Ballasts (CLB) and LED Lamps and Systems (LLS) businesses segments. The company stated at the time it will be prioritizing specialty lighting, such as automotive lighting, laser diodes, and its LED package and component businesses. At the time a company source said the company will be focusing on B2B solutions.

A Reuters report in July speculated Osram might consider selling its lighting business to Foshan Lighting, Zhejiang Yankon Lighting or NVC. The Chinese government is expected to play a pivotal role in advising groups on bidding for strategic assets to prevent companies from driving up market prices. A development that has been reflected in the recent transaction.

GRAM for instance is a state-owned company that has investments in the mining, electronic telecommunications, construction projects, and financing. It is also the controlling shareholder of Chinese LED manufacturer Foshan Nationstar, according to the Sinai report.  Other LED component and LED lighting subsidiaries under GRAM include Ecorising, Shenzhen Primatronix (Nanho) Electronics, Henan Guangdong Rising High Tech Investment Firm (河南廣晟高科技投資有限公司), and others. GRAM will be able to directly or indirectly influence the LED industry following its acquisition of Foshan Lighting shares.

(Author: Judy Lin, Chief Editor, LEDinside)