Eindhoven-based lighting company, Signify, is to acquire the American company, Cooper Lighting Solutions from Eaton. Eaton is an US multinational power management company. Not only that, the Dutch company will buy the US firm for $1.4 billion in cash.
The closing of this approximately €12,7 billion deal is “subject to regulatory approvals and other customary conditions,” reads a press release from Signify. “It is expected to take place in the first quarter of 2020.” According to the press statement, this is a clear strategic fit. “It strengthens Signify’s market positions in North America.”
“(The) announcement confirms the strategic importance of the North American market for Signify,” Signify’s CEO, Eric Rondolat, says in the media statement. “We look forward to welcoming the team from Cooper Lighting. They have built a high-performance company.”
‘We share a passion’
“We share a genuine passion and single focus for lighting and a successful track record in innovation. We will join forces to further develop connected lighting and provide our customers with the highest level of service while optimising operational efficiencies.”
Cooper Lighting Solutions is a leading US provider of professional lighting, lighting controls, and connected lighting. Based on 2018 sales, the business generated $1.7 billion of sales, of which 84% were LED-based.
This transaction is expected to generate substantial cost synergies of more than $60 million per year. This will largely be achieved in the first three years. This will be thanks to savings in the billing of materials as well as from supply chain and sourcing optimisation.
Revenues will grow
Once they have bought Cooper Lighting Solutions, Signify will generate over 50% of its sales in the Professional segment. “This will increase the revenue base for its growing profit engines from €4.9 billion to €6.4 billion. The proportion of sales generated in the Americas increases from 28% to 40%,” says the media statement.
Signify, and Cooper Lighting will maintain separate front offices – sales teams, agent networks, product and brand portfolios, and marketing and product development teams. According to the press release, “Both businesses will be able to strengthen their respective product portfolios.”