Analyses of Asian Buyer's Benefits from Acquiring Siemens Stake in Osram

Siemens has been indiscreet about its dissatisfaction with Osram’s R&D strategy recently. A report from German media Handelsbatt on Monday pointed out the lighting company’s largest shareholder intends to sell its 17% stake to an Asian buyer, just one week after Siemens announced it was unsupportive of Osram new business strategy.

Following the circulation of the latest news on the market, Korean, Chinese and Taiwanese LED manufacturers were nominated as potential Osram shareholders and buyers. It is unclear how much the transaction will be worth, and uncertainties remain about the potential buyer. However, it can be foreseen interested buyers will be engaged in a lengthy bidding war for the controlling stake in Osram.

It is projected that the Asian company that acquires Siemens stake in Osram will have significant influence in the German lighting company’s new board, future LED technology developments, product lines, lighting brands and even distribution channels.

Osram's booth at a lighting show.  (LEDinside)

Additionally, acquiring a stake in Osram could pave the way into the closed automotive lighting market, said an industry source. According to the source, Osram is a prominent player that has dominated the automotive lighting sector, which has barred Taiwanese and Chinese manufacturers from accessing this crucial market sector. If an Asian buyer is able to acquire Siemens and its subsidiary’s close to 20% shares in Osram, it could tap into the automotive lighting market, a far more attractive deal than absorbing its distribution channels. However, LEDinside believes there are many uncertainties in this business transaction, making it difficult for the winning bidder to directly ingress the automotive lighting sector.

A breakdown of Osram’s major shareholders indicates Siemens still has a majority stake of 17%, and its subsidiary Siemens Pension Trust EV has a 2.5% stake in the company. The Siemens group possess close to 20% of Osram’s shares, and in theory has the greatest impact on the lighting company’s policies and decision making process.

Other major shareholders include Norges Bank Investment Management, Deutsche Asset & Wealth Management Investment GmbH, Credit Suisse AG, Blackrock and other leading financial firms.

Osram Licht's (Osram) major shareholders. (Source: 4-Traders)

Siemens and Osram’s future developments will be under the industry radar for a while, and LEDinside projects Siemens will probably issue a statement soon to clarify the situation. The Handelsbatt report was based on information from an industry source, and not an official statement from the leading European engineering company.

Moreover, the possibility that Siemens is bluffing should not be ruled out, and is being widely discussed on the market. Siemens recent actions could be a tactic to pressure Osram to change its management strategy ahead of the German lighting company’s upcoming board meeting, said industry sources.

On Dec. 23, 2015, Siemens released a statement remarking it was disappointed with Osram’s current management policies, which has led to significant losses in its investment in the company: “As an Osram shareholder, Siemens was and is not satisfied with Osram's recent share price development. Due to the shift in Osram's strategy, the value of Siemens' stake in the company has declined from some EUR 940 million (US $1.03 billion) to about EUR 680 million.”

Recent developments indicate Osram’s future plans to spend EUR 3 billion in LED chip R&D and construction of a new fab in Malaysia, and plans to sell its general lighting business will all be affected. Latest rumors that Siemens will sell its controlling stake in Osram has added further uncertainties. What will the future hold for Osram? With the board meeting around the corner, the public will soon find out what’s in store for this traditional German lighting company.

(Author: Ivan Lin, Editor-in-Chief, Content Development Divionshttp:// Translator/Editor: Judy Lin, Chief Editor, LEDinside)

Related articles for further reading:

  1. [Breaking News] Siemens Considers Selling Stake in Osram
  2. Siemens' Unaware of Osram’s LED R&D Plan
  3. Osram Semiconductor Production Costs for Lighting Declines
  4. Osram Investor Against New Investment in LED Chips
  5. How Many MOCVDs will Osram fit in Its New Malaysian Plant?
  6. [Breaking News] Osram Injects EUR 3B in R&D and LED Production
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