THE HAGUE, Netherlands — Dutch electronics giant Philips revealed Monday that the $2.8 billion sale of its lighting unit is in doubt because of U.S. regulatory concerns, casting a cloud over news of better-than-expected profits.
Philips had announced seven months ago that it was selling a majority stake in its LED and car lighting arm, Lumileds, to a consortium led by China-based GO Scale Capital investment.
The deal had been expected to bring in $2.8 billion in cash for Philips, which announced last year that it would focus on healthcare-lifestyle and split off its historic lighting section.
But U.S. regulatory concerns have put the plan in doubt.
“In the course of seeking regulatory approvals regarding the sale of an 80.1% interest in Lumileds, … the Committee on Foreign Investment in the United States has expressed certain unforeseen concerns,” the company said.
Philips and GO Scale Capital would take all “reasonable steps” to address the U.S. concerns, it said, adding however that the closing of the deal was now “uncertain.”
Philips, which sold its first light bulb a few years after it was founded in 1891, has for the past dozen years focused on medical equipment, which now accounts for more than 40% of sales.
The group revealed the hitch in the Lumileds sale even as it emerged from the red ink in the third quarter, reporting a net profit of 324 million euros ($356.90 million compared to a loss of 103 million euros ($113.46 million) a year earlier.
Sales rose 12% to 5.84 billion euros ($6.43 billion), Philips said. On a comparable basis, excluding for example the impact of businesses that have been sold off, sales were up 2%, the company said.
“Philips delivered improved results for the third quarter of 2015, confirming that our operational performance continues to strengthen, despite deteriorating macroeconomic conditions in a number of markets, most notably China,” CEO Frans van Houten said in a statement. Health care sales were driven by the group’s performance in North America, he said.
Copyright Agence France-Presse, 2015