Philips lighting JV focuses on Middle East expansion
The joint venture, which will create a leading lighting player in the KSA, the largest economy in the Middle East by GDP, plans to provide a full range of LED lighting solutions and strengthen Philips’ footprint in the region. The new organization will also create growth opportunities in sustainable technologies to support the KSA government’s objective to reduce energy consumption. The joint venture brings together Philips expertise in LED technology and the benefits of its global supply base with GLC’s deep local market knowledge and strong commercial capabilities. The KSA lighting market is forecast to grow substantially in the period 2014 – 2018, driven by targeted spending on construction, and government and private investments in energy efficient lighting initiatives.
Under the terms of the agreements Philips will acquire 51% of GLC for a total amount of $235 million (on a cash-free, debt-free basis) plus additional transaction costs. Philips’ current Lighting activities in the KSA will be combined with GLC forming the joint venture that will be named Philips Lighting Saudi Arabia. Alliance is the holding company managed by Abdullah Al-Hobayb (founder and chairman of GLC) and will be the JV partner with a 49% stake.
“By partnering with GLC, Philips will be able to grow its business in this important market, particularly in relation to LED lighting. We expect LED penetration in the KSA to achieve strong double-digit growth by 2018, driven by investments in public and private infrastructure,” said Eric Rondolat, CEO of Philips Lighting. “As a global leader in energy efficient LED lighting products, systems and services we look forward to joining forces with GLC to provide innovative, meaningful and energy efficient solutions. GLC’s strong local market knowledge and meaningful customer insights, combined with our technological innovations, will enable us to create highly sustainable solutions that support the Kingdom’s vision to reduce energy consumption in the country.”
GLC has a leading position in the KSA market, with a strong mix of projects, distribution and retail channels which puts it in an excellent position for the future to benefit from the ambitious Saudi Arabia Economic Development plan.
The partnership with GLC builds on Philips’ strategy to serve the needs of local markets. The venture will focus on LED products, systems and services for the entire lighting market and will manufacture and distribute professional LED lighting fixtures throughout the entire value chain. The joint venture will employ approximately 1,300 people.
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