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KKR switches on majority stake in NVC China
Posted on Monday, 12 August 2019 13:15
Private equity firm KKR & Co has agreed to take a 70.0 per cent interest in NVC Lighting’s China lighting business, known as NVC China, in a deal worth USD 794.00 million and creating a strategic partnership with the vendor, which will continue to control 30.0 per cent of the assets.

The buyout group’s contribution of resources and expertise will better position the target for growth in the domestic market.

According to Zephyr, the M&A database published by Bureau van Dijk, this represents the largest deal to target an electric lighting equipment manufacturer in China on record, with the closest competitor being MLS buying Harmony Mingxin (Yiwu) Optoelectronics Technology for CNY 4.00 billion (USD 566.30 million) last year.

Under the terms of the transaction, KKR and NVC Lighting will form a joint venture that will be majority controlled by the private equity acquiror and will contribute the latter’s lighting operations in the mainland.

The group’s other assets in China, including its original design manufacturing and international business will not be included in the deal and will remain with the vendor.

In addition, a special dividend of no less than HKD 0.90 (USD 0.11) per share will be declared by the board of NVC Lighting and paid to shareholders, subject to approval and closing of the transaction.

Completion is slated for the fourth quarter of 2019, following the green light from security holders and regulators.

NVC China is billed as the leading lighting company in the country, manufacturing, selling and distributing branded lighting products and providing services to customers and business clients across a diverse distribution network.

Wang Donglei, chairman of NVC Lighting, said: “Our board conducted a comprehensive sales process, assisted by financial and legal advisors. We are pleased that this robust process has produced an outstanding outcome for our shareholders, who will maintain minority ownership in NVC China as well as full ownership of NVC Lighting’s international business and its non-lighting business in China, and receive a compelling cash consideration for their shares.”

Stocks in the larger company rose 57.1 per cent following the announcement at HKD 1.10 at 16:00 today, giving the group a market capitalisation of HKD 4.65 billion.

© Zephus Ltd