Global investment firm KKR and NVC Lighting Holding Limited (“NVC Lighting” or the “Company”) (Stock Code:2222) today announced the signing of a Share Purchase Agreement under which KKR has agreed to set up a strategic partnership with NVC Lighting and acquire a majority interest in NVC Lighting’s China Lighting Business (“NVC China”) for a total equity value of approximately US$794 million. Following the completion of the transaction, KKR will own 70% of NVC China and NVC Lighting will hold the remaining 30% and receive a cash consideration.
NVC China is a leading lighting company in China, manufacturing, selling and distributing branded lighting products and providing lighting solutions to consumers and business clients through a robust distribution network across China.
Paul Yang, Member and Head of KKR Greater China, said, “China’s lighting market has experienced tremendous momentum over the past 20 years and continues to develop as technology advances and next generation products come online. NVC China is an industry leader with an extensive distribution network, well-known brand name and strong product design capabilities. We look forward to working together with NVC China’s talented management team to support their long-term growth plan, as well as contributing to the overall development of China’s lighting industry and deepening KKR’s commitment to the market.”
Wang Donglei, Chairman of the Board of NVC Lighting, said, “Our Board conducted a comprehensive sales process, assisted by financial and legal advisors. We are pleased that this robust process has produced an outstanding outcome for our shareholders, who will maintain minority ownership in NVC China as well as full ownership of NVC Lighting’s international business and its non-lighting business in China, and receive a compelling cash consideration for their shares. We believe we have found a partner in KKR who shares our conviction in the opportunity for NVC China and will contribute resources and operational expertise to support the long-term development of the business.”
NVC China will continue to commit to the China market and focus on addressing the increasing demand of Chinese consumers and business clients for high-quality lighting products. The support of KKR’s resources and operational expertise will enable the business to undertake a long-term growth strategy that is also supported by China’s ongoing consumption, industrial and commercial upgrades, as well as the promotion of environmental protection and energy conservation. These trends underpin healthy long-term sector growth for the lighting industry in China, and NVC China will invest in its business to ensure the NVC brand stays ahead as a technology and business model innovator.
In connection with the transaction, KKR and NVC Lighting are to form a Joint Venture whereby KKR will own 70% of NVC China and NVC Lighting will own the remaining 30%. NVC Lighting will transfer 100% of NVC China to the Joint Venture co-owned by KKR and NVC Lighting. NVC Lighting will also receive a cash consideration from the transaction. The final settlement of payment is subject to certain adjustments and closing conditions.
A Special Dividend not less than HK$0.9 per share will be declared by the Board of NVC Lighting and paid to the Company’s registered shareholders, subject to the approval and closing of the transaction. NVC Lighting will convene an EGM for shareholders to approve the transaction and Special Dividend.
NVC Lighting’s non-lighting business in China, China ODM business and international business are not included in the transaction and will remain with NVC Lighting.
The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions and regulatory and shareholder approvals.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Fangda Partners and Kirkland & Ellis acted as legal advisors to KKR. Freshfields Bruckhaus Deringer acted as legal advisor and Deloitte & Touche Corporate Finance Limited acted as financial advisor to NVC Lighting.
KKR is making this investment from its flagship Asian Fund III. China is a core focus within KKR’s Asia Pacific strategy, and the Firm has deployed more than US$4.5 billion since 2007 to build domestic champions into industry leaders. KKR delivers deep, local expertise to Chinese companies across various sectors through its offices in Beijing, Hong Kong, and Shanghai.