Recently, reporters learned from insiders close to Mulinsen that it has cooperated with the internationally renowned investment fund IDG to form a bidding consortium to participate in the bidding for the acquisition of Osram's lighting business assets.
“IDG has a relatively good interaction with us and is more willing to support us in participating in Osram’s bidding project.” Lin Jiliang, executive general manager of Mulinsen, said in an interview with reporters.
Cooperative bidding with IDG
On May 16, on the 5th floor of the Mulinsen headquarters located on Mulinsen Avenue, Xiaolan Town, Zhongshan City, the busy Sun Qinghuan held a board meeting with six other directors. During the meeting, they reviewed and approved the "Proposal on Agreeing to the Company's Participation in the Bidding Consortium to Submit a Legally Binding Bid to OSRAM Licht AG (hereinafter referred to as "Osram").
Mu Linsen said that in order to promote its own internationalization process and improve its strategic layout in the LED industry, it has decided to form a bidding consortium with its partners to participate in the bidding for the acquisition of some of Osram's lighting business assets.
The reporter learned from an insider close to Mulinsen that the partner of the bidding consortium formed with Mulinsen is the internationally renowned investment fund IDG, which "involves the regulations of the China Securities Regulatory Commission and has made a lot of plans."
"IDG is taking the lead in organizing more investors, but (they) are all financial investments. Mulinsen is the main strategic investor, and (each) contributes a portion of the funds." said the above-mentioned person familiar with the matter.
"Understanding Mulinsen's strategic layout for global international brands, IDG Capital agrees with it, and they also hope to participate together and jointly win the Osram acquisition project." The above-mentioned person familiar with the matter told reporters.
Public information shows that IDG has entered the Chinese LED industry very early. As early as 2010, it teamed up with Jinshajiang Venture Capital Fund and others to jointly invest in Yimeixinguang (Beijing) Technology Co., Ltd. to jointly create a high-brightness light-emitting diode (HB LED) enterprise flagship. Another move of IDG that has attracted much attention is its investment in domestic chip supplier giant Huacan Optoelectronics.
The reporter noticed that Mulinsen, which specializes in Lamp LED, SMD LED, Display and LED applications, has a strong desire for upstream chip supply.
On April 11, Mulinsen and Huacan Optoelectronics signed a cooperation agreement. The former will purchase LED chips from the latter in the next three years, with a product value of no less than 1.5 billion yuan.
"IDG has a relatively good interaction with us because of its relationship with Huacan Optoelectronics, and is more willing to support us in participating in Osram's bidding project." Lin Jiliang, executive general manager of Mulinsen, said in an interview that the bid document (to Osram) with a determined price has been sent, and the bid document includes the purchase amount.
Mu Linsen’s intention to acquire Osram’s lighting assets has been rumored as early as last year. However, it has not disclosed any more information on the acquisition of Osram since then. This time, it has obviously accelerated its acquisition speed.
Mu Linsen attaches great importance to the acquisition, and is personally led by Sun Qinghuan. "The board of directors authorizes Sun Qinghuan to negotiate acquisition matters and sign relevant documents on behalf of the company."
Mu Linsen may be sure of victory
Public information shows that Osram, one of the world's three largest lighting companies, has five major parts: CLB (traditional lighting) and ballasts), LLS (LED lamps and systems), L&S (lamps and solutions), SL (special lighting, mainly automotive lamps) and OS (optoelectronic semiconductors, mainly LED chips and devices), with world-renowned brands OSRAM and Sylvania, and a huge sales channel covering about 150 countries.
As early as April 2015, Osram announced its plan to spin off its channel business and expected to complete the business spin-off within 12 months. Now we have reached the sprint stage. A person close to the bidding told reporters, "According to Osram's relevant process, it is probably the final tender submission (stage), which should be the moment to make a decision."
Mu Linsen appears ambitious when it comes to bidding for Osram. Lin Jiliang told reporters: "We have a very high degree of willingness and a certain degree of confidence in who will be more suitable. I believe that Osram will make a reasonable judgment."
As for when the taker will be finalized, "I think it won't take too long. Maybe within a month, the other party (will have) a certain response." A domestic LED industry insider told reporters.
In fact, Osram has about 5 billion euros in assets, and the general lighting and traditional lighting assets it has cut out for sale amount to about 2 billion euros. It hopes to find a suitable investor.
“We can reduce costs for Osram, which is a very important advantage for us.” Lin Jiliang told the Times Weekly reporter that if the two parties come together, there will be good complementarity, and it will be a matter of 1+1>2 for both parties.
At present, the bidding for Osram's divestment assets is very fierce. A person familiar with the matter told reporters that in addition to Mulinsen, Dehao Runda also participated in the bidding. However, Dehao Runda kept his mouth tight and did not reveal any information.
As for who is most likely to succeed in the bid, LED industry researcher Zhang Xiaofei told Times Weekly reporter, "Mu Linsen, let's talk about strength and company strategy."
The layout of the M&A maniac
Since its listing in February 2015, Sun Qinghuan has been conducting capital operations and continuously acquiring multiple assets. According to the global LED lighting packaging factory ranking recently announced by the Global LED Research Institute, Mulinsen has become the fifth largest packaging factory in the world in 2015.
In order to achieve the goal of being promoted to the top three manufacturers in the world within 10 years, Sun Qinghuan has not only actively expanded production in recent years, but also continuously acquired some niche lighting manufacturers. For example, on March 25, 2016, he acquired Hong Kong LED filament lamp manufacturer Super Times Light Source (Group) Co., Ltd. (hereinafter referred to as "Super Times Light Source").
In Lin Jiliang’s view, Mulinsen’s decision to acquire Ultra-Era Light Source was mainly due to its optimism about the booming development potential of the LED filament lamp market in 2016 and the unique positioning Ultra-Era Light Source has created in the market. The synergy after the merger can help Mulinsen expand more markets and channels.
The reporter found that one of the reasons why Mulinsen was interested in this asset should be his background in Osram.
The main assets of Super Times Light Source are the land use rights, ownership of the above-ground buildings and its production equipment of Xinhe (Shaoxing) Green Lighting Co., Ltd. (hereinafter referred to as "Xinhe (Shaoxing)").
Xinhe (Shaoxing) was established in October 2007 with investment from Yan Jianguo. From October 2008 to April 2013, it was indirectly controlled by Osram. In April 2013, Super Era Light Source was transferred from Osram, thus holding 100% of the equity of Xinhe (Shaoxing).
In fact, Osram is also one of the major customers of ultra-era light sources. Xinhe (Shaoxing) was once the largest manufacturing base for energy-saving lamps (CFL) and LED bulbs planned by Osram. Although Osram no longer invests in the Shaoxing factory, it has established a deep OEM partnership with Super Era Light Source.
Lin Jiliang told reporters that after Mulinsen completes this merger, Ultra-Era Light Source will retain the factory production lines, technology, quality control systems, etc. originally built by Osram. These valuable assets and experience will give Mulinsen many advantages.
In addition to ultra-era light sources, most of Sun Qinghuan's other layouts also focus on the main LED field. In September 2014, Mulinsen signed the "LED Product Production Project Investment Contract" with the Jiangxi Xinyu High-tech Zone Management Committee, with a total project investment of 2 billion yuan. In April 2016, Mulinsen signed a strategic agreement with Huacan Optoelectronics.
Talking about Mulinsen's investment and M&A logic, "the upstream and downstream processes are carried out simultaneously to solve problems on both the supply side and the demand side." Lin Jiliang told reporters that the product supply chain must be made stronger and the ecosystem more complete.
If Sun Qinghuan can successfully acquire Osram, it will be just around the corner to join the world's third largest LED lighting company. Lin Jiliang also admitted, "If we seize the opportunity of Osram, it seems to be a pretty good direction."
ANNA