July 4, 2019 / 10:17 AM / 2 months ago

Osram backs takeover offer from private equity firms

FRANKFURT (Reuters) - The managing and supervisory boards of Osram (OSRn.DE) are backing a 3.4 billion euro ($3.8 billion) takeover offer from private equity firms Bain and Carlyle (CG.O), the German lighting group announced on Thursday.

FILE PHOTO: Logo of lamp manufacturer Osram is pictured during official opening of the company 'World of light' showroom in Munich, Germany, October 24, 2017. REUTERS/Michaela Rehle/File Photo

The offer price of 35 euros a share represents a premium of 21% before the approach was made public, Osram said.

Osram, which made the statement of support after an evening board meeting, said that the private equity groups were committed to its growth strategy and had made “extensive commitments” about employees and locations.

“Bain and Carlyle are the right partners for Osram at the right time,” Osram Chief Executive Officer Olaf Berlien said in a statement.

Osram said on Wednesday that they had received the offer, confirming an earlier Reuters report that cited a source close to the matter saying they had secured funding for their purchase.

Shares rose 0.8 percent on Thursday, after surging as much as 13% on Wednesday.

The 110-year company used to make lamps and car headlights but over the years has broadened its business to include LED components, lighting for stage, film sets and growing plants indoors. Its Italian unit provides light effects for the annual Eurovision song contest.

Struggling with weakness in the automotive industry and a broader economic slowdown, Osram has seen its stock lose more than 60% of its value since hitting a high of 79.58 euros in January 2018.

In February this year, the company had confirmed that Bain and Carlyle were looking at whether to jointly bid for as much as all its shares. But weak financial performance had led many investors to doubt whether the investors would actually go ahead with their plan.

“The fundamental situation at Osram remains difficult,” analysts from DZ Bank said in a note, changing their recommendation to ‘hold’ from ‘buy’, noting growing competition from the semiconductor industry.

Osram said that they would continue to operate under the same name, and that the corporate headquarters would remain in Munich.

The offer period is expected to conclude in early September. By that point, Bain and Carlyle will have wanted a minimum acceptance of 70 percent of the outstanding shares.

Reporting by Arno Schuetze and Alexander Hübner; Additional reporting by Tom Sims; Editing by Deepa Babington and Sandra Maler

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