Chinese consortium wins Osram assets Mulinsen borrows a ship to attack LED

“A journey of surprise, a team with the strongest surface, an unforgettable day.” Beijing time, July 27, Munich, Germany, Mulin Lin (002745.SZ) executive general manager Lin Jiliang updated the WeChat circle of friends and took a photo: Lin Jiliang and Ms. Lin Qinghuan, chairman of Mulinsen, smiled and raised champagne to celebrate a certain issue.

Subsequently, Lin Jiliang told the Times Weekly reporter that the Chinese consortium, led by the strategic investor IDG Capital and the general partners of Mulinsen and Yiwu State-owned Capital Operation Center (hereinafter referred to as “Yiwu State-owned Assets”), successfully won the Langdewans ( LED) Bidding for VANCE, Osram's spin-off of assets).

On the morning of July 27, Mulinsen announced that OSRAM had officially agreed to sell the newly operated lighting business company Landvewans on the 26th and accept the purchase price of more than 400 million euros (about 2.931 billion yuan). .

Since the rumored that Osram will divest some of its lighting business assets in November last year, the consortium from China is just around the corner. Many listed companies in the LED industry have thrown olive branches and tried to obtain the "fat" of Osram to rapidly expand their own strength.

The successful bidding is of great significance to Mulinsen. This Chinese private enterprise with only 20 years of brand history is in urgent need of “Giant” Osram to quickly become international and compete for a place in the global LED industry .

The cross-border acquisition also requires approval from governments and regulators.

Raise 3.5 billion yuan of funds

Earlier, some insiders told the Times Weekly reporter that five companies , including domestic led companies , Mulinsen, Dehao Runda (002005.SZ), Feile Audio (600651.SH) and Tongfang (600100.SH), are busy in Europe. Negotiate the acquisition of some assets of Osram.

Nowadays, the acquisition has finally come to the fore. According to the OSRAM press release, the consortium that acquired some of its lighting assets includes strategic investor IDG, China Lighting Corporation MLS (Mulinsen) and financial investor Yiwu State-owned Assets Operation Center.

The Times Weekly reporter noticed that in order to promote the acquisition cooperation of 400 million euros, the parties have tried their best. As for the seller group, as early as last year, OSRAM has begun to spin off its general lighting source business. On July 20 this year, OSRAM announced that the company has successfully completed the spin-off of this part of the assets. It was independently operated under the OSRAM Group on July 1, 2016 and was named LEDVANCE.

Landwells is the bid for the Chinese consortium such as Mulinsen. According to reports, Landwells mainly sells general lighting sources, lamps and smart home products, and will continue to use OSRAM's licensed OSRAM brand for some time to come.

In terms of the buyer group, the layout is also in full swing. Mulinsen chose a curve-based acquisition. In May of this year, Mu Linsen announced that it had invested 500 million yuan to establish a fund in partnership with Harmony Haoquan Investment Management (Beijing) Co., Ltd. (hereinafter referred to as “Harmonious Haohao”) to acquire high-quality assets in the LED industry.

According to the announcement, Harmony is a well-known international capital IDG company. As a veteran strategic investment company, he has extensive practical experience in operating overseas markets and has been active in industrial technology.

Since then, Mulinsen executive general manager Lin Jiliang confirmed to the Times Weekly reporter that the two companies will form a bidding consortium to participate in the bidding for Osram's lighting business assets.

On July 15, the bidding consortium again expanded the team and funds "ammunition." On the same day, Mulinsen announced that he signed the "Yiwu Harmony Mingxin Equity Investment Partnership (Limited Partnership) Partnership Agreement" with Harmony Haoquan and Yiwu State Assets.

The official website of Yiwu State-owned Assets Management Committee shows that this is a state-owned enterprise established at the end of 2013 with a registered capital of 40 million yuan and total assets of 68.5 billion yuan. It is divided into 8 major group companies in Yiwu.

According to the announcement, Yiwu Harmony Mingxin Equity Investment Partnership (Limited Partnership) (hereinafter referred to as “Harmony Mingxin”) has a total of 4 partners, of which 3 limited partners (hereinafter referred to as “LP”) are harmonious. (Investment of 142.86 million yuan, accounting for 28.572%), Mulinsen (investment of 177.57 million yuan, accounting for 35.713%) and Yiwu state capital (investment of 177.57 million yuan, accounting for 35.713%). At this point, the new joint bidding body has basically taken shape.

On July 27, the above four partners continued to expand the funds “ammunition”, and proposed to increase the amount of subscribed capital for the harmonious Mingxin in the same proportion. The capital contribution amounted to 3.51 billion yuan, of which Mu Linsen intends to subscribe for the capital contribution from 177.57 million yuan. The yuan increased to 1.25 billion yuan.

On the same day, Mulinsen announced that Harmony Mingxin's subsidiary, Mingxin (Yiwu) Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Mingxin Optoelectronics”), was established on July 26th in Germany with OSRAM GmbH (a company established under German law). ), OSRAM SYLVANIA INC. (a company established under the laws of the United States) signed a share purchase agreement to acquire all shares of Roundvals from both.

Prospects for the acquisition remain unclear

The consortium from China acquired Osram lighting assets, which sparked heated discussions in the industry. However, Mulinsen’s top management may continue to show a modest and cautious attitude, as subsequent approvals will still test the buyers and sellers.

"Although the two sides have agreed, but they still have to accept the approval of the government departments and regulatory agencies, there are many (a) areas that must be 'passed through the border', and it is not easy to say now." Zhang Xiaofei, chairman of Gaogong LED, expressed concern to the Times Weekly reporter.

Zhang Xiaofei further stated that the agreement reached between the Chinese consortium and Osram will be subject to the approval of the German government authorities and relevant regulatory agencies, and an (asset) assessment will be conducted. "This is my personal opinion and retains 90% of the hope."

In fact, what worries the industry is whether the acquisition will follow the footsteps of the Jinshajiang Group's acquisition of Philips LED assets.

On March 31, 2015, the Chinese and foreign syndicates led by GO Scale Capital of Jinshajiang and the Royal Philips of the Netherlands reached an agreement to acquire the 80.1% stake in Lumileds (LED and Automotive Lighting) under Royal Philips. In order to complete the delivery, the teams of the two sides spent nearly a year working together with the review by the regulatory authorities such as the US Foreign Investment Committee (CFIUS). However, the deal eventually ended in January of this year due to the inability to resolve CFIUS “concerns about national security”.

Even with these hidden concerns, Zhang Xiaofei still expressed to the Times Weekly reporter that he is optimistic about the acquisition of Osram assets by the Mulinsen curve. "The main strategy lies in the strategy and international IDG capital. In the future, Roundmans will operate independently."

Speaking of assets such as employees and technical equipment that will be used in the future, Lin Jiliang told Time Weekly that Mulinsen is one of the bidding consortiums, and the specific actions will be led by IDG.

According to public information, Roundmans has 8,800 employees as of July 1 this year. The transaction is expected to end in FY2017.

At the same time, OSRAM revealed that the acquisition conditions include retaining the existing R&D team and not dismissing existing employees until the end of 2018. "The entire acquisition agreement includes ensuring that employees in Germany are retained."

Time Weekly reporter learned that as the acquisition company, Mingxin Optoelectronics did not acquire the brand of Osram, and its ownership is still in the hands of Osram. The buyer team will also pay an additional "trademark license agreement payment".

In the eyes of the industry, Osram's move is very clear. If a large number of employees leave the company, it will definitely affect the performance and brand of Osram. During the transition period, it is very important to maintain the stability of the team. Loss, can be recovered in the future, do it yourself.

How to play the century-old brand

For Mulinsen, who is looking for LED overseas development, the acquisition of Lang Dewans is of great significance.

Although OSRAM's business in the traditional lighting sector has been declining in the past few years, its brand channels in Europe and North America are Chinese investors' attention. In FY2015, the general lighting business accounted for 40% of OSRAM's overall performance and revenue of approximately 2 billion euros.

“Osram has a good channel and brand advantage in Europe and America. Mulinsen has many successful experiences in Asia Pacific, especially in China. Such complementarity is the biggest driving force for cooperation between the two parties.” Sun Shaofeng, Marketing Director of Mulinsen told the Times Weekly reporter.

Osram China Lighting said that as part of the deal, OSRAM and Mulinsen will establish a strategic supply and demand relationship - after Osram's LED chip factory in Malaysia is put into production, Mulinsen plans to make annual purchases from the plant.

Mulinsen, who specializes in LED packaging and application products, was founded in the 1990s and eventually landed Mulinsen in the capital market in February 2015.

Lin Jiliang told Time Weekly that the acquisition would hope to expand into Haikou and better cooperation with Osram and Lang Dewans.

As a rising star in the "20s", Mulinsen is obviously much younger than Osram, which has more than 100 years of history. How to provoke the burden and revitalize this century-old brand is not yet known.

In fact, in recent years, affected by factors such as overcapacity in the domestic LED industry, Chinese listed companies have gone overseas to look for investment targets, initiated a number of mergers and acquisitions, or expanded production capacity at peripheral peripheral plants, or acquired overseas LED assets. In the eyes of the industry, this is the only way for the development of the LED industry.

For Mulinsen, this year is the most important year for M&A investment since its listing. In May, Mu Linsen’s issuance of shares was listed and raised 2.3 billion yuan.

With such a large amount of "free money", Mulinsen has invested in M&A. In June, Mulinsen purchased 80% of the shares of Super Time Light Source for 315.5 million yuan.

In addition, Mulinsen continues to invest in its important subsidiaries to strengthen their strength. On June 16, Mulinsen increased its capital to Hong Kong's wholly-owned subsidiary, Mulinsen Co., Ltd. with its own funds of 100 million US dollars. The registered capital increased to 150 million yuan to promote its better overseas business. On June 28, Mulinsen planned to increase its capital by RMB 300 million to develop Jing Lighting (Xiamen) Co., Ltd., and its shareholding ratio increased to 25.50%. Subsequently, Mulinsen increased the capital of Jiangxi Mulinsen Lighting Co., Ltd. with a raised capital of 943 million yuan, increasing its registered capital to 1.243 billion yuan; and raising capital of 757 million yuan to Jiangxi Mulinsen Optoelectronics Technology Co., Ltd. to increase its capital. Increased to 1.057 billion yuan.

In the eyes of an LED industry person, how Mulinsen will “digest” these investment projects in the future to better improve its industrial chain and integrate investment M&A with the company's main business development is an important challenge for the future.