Goodbye to the Big 3 Lamp Companies, Hello New Owners

The LED revolution is now complete.  The historical Big 3 lamp companies are essentially either out of the business (Philips and OSRAM Sylvania under new owners) or removed from the business (GE).

OSRAM Sylvania’s announcement that LEDVANCE has now been sold to MLS, a Chinese LED manufacturer and the parent company of Forest Lighting, completes the cycle.

And looking into some of the information reveals how fast the lamp market has fallen:

Regarding the business

• The general lamps business of OSRAM, which was what was sold, represented 36% of the company’s sales, or about $2.2 billion in USD (so they essentially got 20% of sales for the worldwide business).
• OSRAM was the world’s second largest lighting company

The acquisition price:

• The acquisition price was only $439 million USD.  Doesn’t seem like too much.
• Osram will additionally receive payments for license agreements of trademark rights
• Osram and MLS entered into a strategic supply agreement, by which MLS intends to purchase an annual order of LED chips from the new plant in Kulim, Malaysia, once production has started.

MLS, as mentioned, is a Chinese company.  Earlier this spring they announced their Q1 results.  Sales were up 9%, however, revenues were only $125M USD … a $500M run rate.  This explains why they needed two equity investors to purchase OSRAM Sylvania.

Reportedly MLS is considering a dual branding approach.  LEDVANCE as a “higher” brand and Forest Lighting as a low to mid-range brand (which makes one wonder if distributors want to buy two brands, essentially from the same company or if they view the LED lamp market as only big enough to carry one line with much of their LED business being fixture driven?  Could MLS’ approach drive more opportunity for Satco, Halco, TCP, etal?

What was once an important product category for distributors has quickly diminished.  When the term “LED” is spoken it is more often in reference to fixtures.  The lamp market may have devolved into essentially a replacement market and perhaps more of a residential / DIY market given that the commercial replacement market is comparatively nominal.

It will be interesting to see how the US group that we know changes … if at all and what role, if any, Forest Lighting has.  Will there be two brands (and what will be the difference)? Will LEDvance add more fixtures? Will the people remain long-term? Will marketing groups be “encouraged” to take Forest Lighting in?

What do you think about the sale? Which lamp suppliers are you currently purchasing from?  What do you think?