Osram Confident Investors Will Back its Three-pillar Strategy

News Source:

Reuters

*General Lighting market is projected to have annual 9.5% growth until 2020, while automotive lighting is to grow at 4% per year.

German lighting manufacturer Osram is confident that its large investors will support its new strategy of investing in general LED lighting market, reported Reuters.

The share price of Osram plummeted following the disclosure of its new strategy announcement to invest in a new LED semiconductor plant in Malaysia for Euro €1 billion (US $1.08 billion) last November.

The investment is expected to fuel Osram’s market presence in general lighting for streetlights and residential lighting, which hopefully could help the company to compete with Chinese manufacturers.

Osram is convinced that the gains in its niche specialty markets including automotive lighting is inadequate and the company needs a new market with rapid growth. According to Osram, the general lighting market is projected to have annual 9.5% growth until 2020, automotive lighting has only 4% growth per year. On the contrary, some of the company’s investors prefer Osram to simply stick to niche markets after spinout of the general lighting business.

The German giant’s biggest shareholder Siemens stated last month that it was not informed about the strategy change. Despite the fact that Siemens was not happy about the loss of its Osram holdings, the company also responded that it has no plan to sell any of Osram’s share. Meanwhile, it reserved the right to comment on Osram’s detailed strategy direction.

Chief Executive Olaf Berlien of Osram commented that they have been closely communicating with its existing and potential investors while they are convinced that the investors will support the strategy shift in the end.

Meanwhile, the spinout of its declining general lamp business has attracted buyers mainly from China, with an estimated bid at approximately Euro €500 million.

Berlien told Reuter that the first indicative bids for its general lighting business is expected to start in the next few days.

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