Forest Lighting’s Ambitious LED Expansion Vision: Bidding Consortium with IDG for Osram’s Lighting Business Bid

Forest Lighting, ranked as the top five global LED package manufacturer in the lighting application sector in LEDinside’s analysis, has been expanding its scale through acquisition ever since it became listed company back in February 2015.

The mediator behind the scene is Sun Quinghuan, chairman of MLS, who owns 80.01% stake in the company as of March 31. Anonymous insiders revealed that Sun Quinghuan, the 43- year- old director of board and chairman, has always been low-profile as he maintains a few connection with others. Sun leaves all the management and decision- making to Lawrence Lin, the General Manager of the Chinese LED giant.

Forest Lighting attempts to rank in the top three largest LED lighting company in scale within three years. One of its must-have is the acquisition of Osram’s lighting business.

Forest Lighting has teamed up with IDG Capital Partners (formerly IDGVC), a global family of venture funds, to form a bidding consortium to participate in the bidding of Osram’s lighting business.

We maintains better relationship with IDG Capital Partners and that it has been supportive in assisting our bidding of Osram’s lighting business, said General Manager Lawrence Lin.

Forming Bidding Consortium with IDG Capital Partners

On May 16, Sun and the other six board members approved the proposal of participation in bidding consortium and bidding application for Osram LichtAG.

In order to facilitate its globalization and strategic deployment, Forest Lighting has formed a bidding consortium with IDG, participating in the bidding of Osram’s lighting business.

In order to follow the regulations of China Securities Regulatory Commission, many plans were developed to ensure the validity of the consortium with IDG Capital.

IDG is currently seeking more investors but they remain to be entirely financial investment as Forest Lighting plays the part of strategic investor. Each of the party will provide a portion of funding, said the anonymous insider.

Upon understanding the international branding deployment of Forest Lighting, IDG decided to join the China-based LED maker in the bidding of Osram’s lighting business acquisition project.

According to open data, IDG started to invest in LED industry at an early stage. As early as 2010, it has jointly invested in Shineon with Go Scale Capital for High brightness LEDs technology. Meanwhile, IDG also invested in HC SemiTek, a Chinese LED chip supplier.

It’s also noted that Forest Lighting, as specializing in lamp LEDs, SMD LEDs, display and LED applications, the company has huge demand in upstream LED chips.

On April 11, HC SemiTek signed an agreement to sell Forest Lighting its LED chips within the following three years with the total value of the sold products no less than RMB 1.5 billion (US $232.05 million). Lin has sent out the bid letter with confirmed acquisition price to Osram.

Back in 2015, rumor has it that Forest Lighting is interested in acquiring Osram’s lighting business as no further update is released afterwards. Apparently, Forest Lighting has accelerate its pace of acquisition. As the board of director authorized Sun to represent the company in negotiation of acquisition and signing related documents, it’s evident that the company value this acquisition.

Forest Lighting Determined to Win the Acquisition

Osram is one of the top three largest lighting manufacturers in the world. The German lighting giant’s business is comprises of five main departments, including Classic Lamps & Ballasts (CLB), Lamp &Systems (LLS), Luminaires and Solutions (LS), Special Lighting (SL) and Osram Opto Semiconductor (OS). The manufacturer owns the renowned brands include Osram and Sylvania with its channels covering approximately 150 countries.

Back in April 2015, Osram revealed its plan to spin off lighting business. The company aimed at completing spin off within 12 months. The spin off process has come to the final stage now. Based on Osram’s related schedule, the final decision making will happen in the bidding stage, said a source that is involved in the acquisition.

Among Osram’s EUR 5 billion (US $5.58 billion) asset, the spin-off general lighting and conventional lighting business are worth approximately EUR 2 billion (US $ 2.23 billion).

We can lower costs for Osram, this has always been our advantage, said Lawrence Lin. Should Forest Lighting successfully acquire Osram’s lighting business, and the two companies will be complementary, which is a win-win situation for both sides.

The competition of acquiring Osram’s spin-off is intense. Aside from Forest Lighting, Elec-Tech also participates in the bidding has not reveal any update so far.

Deployment of the Acquisition-addicted Chairman

Forest Lighting, ranked the ninth largest global LED package manufacturer in the lighting application sector worldwide according to ranking released by LEDinside, a division of TrendForce, and has been expanding its scale through acquisition ever since it became listed company back in February 2015.

In order to reach the goal of ranking in the top three largest manufacturers within a decade, Sun not only expand its production capacity but continue to acquire several companies that specialize in niche market applications. An example is Super Trend Lighting, a Hong Kong LED filament bulb manufacturer, was acquired by Forest Lighting on March 25, 2016.

For Lawrence Lin, the acquisition of Super Trend Lighting results from the promising outlook of filament LED bulbs market in 2016 and Super Trend Lighting’s unique market positioning. The merger is expected to expand Forest Lighting’s market while providing better channels for the ambitious LED chip maker.

One of the reasons that Super Trend Lighting attracts Forest Lighting is the Osram related background. Super Trend’s main asset includes its subsidiary Sunny World (Shaoxing) Green Lighting ‘s land, buildings and equipment.

Sunny World (Shaoxing) was launched by King Kuo Yim (嚴建國) in October 2017. Osram indirectly held the company’s stake from October 2008 to April 2013. Super Trend Lighting purchased the stake held by Osram and held 100% of Sunny World (Shaoxing) Green Lighting’ 100% share.

In fact, Osram is also one of Super Trend Lighting’s main clients. Shaoxing was once Osram’s largest CFL and LED manufacturing base. Though Osram had withdrew its investment in Saoxing-based plant, it has built strong OEM cooperation connection with Super Trend Lighting.

Super Trend Lighting gets to keep its original product lines, R&D and quality control that were established by Osram intact upon acquisition. These precious asset and experience will bring Forest Lighting great benefit, said Lawrence Lin

Aside from Super Trend Lighting, Sun’s other strategic deployment mainly circle the LED business sector. In September 2014, the company signed an agreement with Xinyu National High-Tech Industrial Development Zone in Jiangxi province, jointly invest in LED production. The investment totals at RMB 2 billion (US $304.93 million). In April 2016 Forest Lighting and HC SemiTek signed a strategic agreement.

As for Forest Lighting’s investment and merger strategies, “only by working simultaneously on upstream and downstream, can the issues of supply and demand end be solved”, said Lin. He is determined to consolidate the company’s product supply chain while completing the ecosystem.

Should Sun successfully secured the acquisition of Osram’s lighting business, the goal of ranking in the top three largest LED lighting manufacturer will be a matter of time.

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