Attendees inspect the Osram Licht AG exhibition stand during the Building + Light trade fair in Frankfurt, Germany. (Photographer: Martin Leissl/Bloomberg)

Bain, Carlyle Are Weighing a Joint Bid for Germany’s Osram

(Bloomberg) -- Osram Licht AG is in talks with Bain Capital and Carlyle Group LP about a potential takeover of the German lighting manufacturer, a move that would take the business private less than 18 months after Siemens AG sold off the last of its stake.

The two U.S. buyout firms are considering a joint acquisition, Munich-based Osram said in a statement Wednesday, after Bloomberg News reported the talks. The suitors are conducting due diligence and could make a bid by the end of March, people familiar with the matter have said.

Osram shares surged 14 percent to 40 euros at the close in Frankfurt, their biggest gain since November, valuing the company at about 3.9 billion euros ($4.4 billion).

The headlamp maker has struggled since it was cut loose by Siemens, with the shares more than halving last year before speculation of takeover interest started to circulate. Osram’s performance is closely tied to the automotive industry, and in January the company warned that a rout in the parts market had accelerated in December, exacerbating problems caused by weak growth in China.

Private Cash

That’s attracted the attention of private equity firms, which are flush with cash and looking for deals in depressed sectors. Hellman & Friedman agreed to pay $11 billion for U.S.-based human-resources firm Ultimate Software Group earlier this month, while Apollo Global Management is attempting to buy British packaging maker RPC Group Plc for 3.32 billion pounds ($4.34 billion). The amount of capital available to fund managers has risen to $2.1 trillion, according to data provider Preqin.

The number of private equity buyouts larger than $1 billion has been growing since the financial crisis and hit a high of 74 last year, the most since 2007, according to data compiled by Bloomberg.

The talks “support our case that Osram is fundamentally a good business going through a difficult patch,” Jefferies analysts including Peter Reilly said in a note. “The underlying problems have been weaker-than-expected auto and smartphone production rates,” which are “outside Osram’s immediate control,” they said.

Osram management should expect a large premium to the current share price due to last year’s declines, the analysts said.

The talks with Bain and Carlyle are ongoing and no final decisions have been made, Osram said in its statement. The company also makes laser diodes for iris scanners in modern smartphones, as well as components for heartbeat sensors in smart waches.

The German company would welcome all types of new investors -- including activists or private equity firms -- if they back the company’s strategy, Chief Financial Officer Ingo Bank said in an interview with Bloomberg Television this month.

©2019 Bloomberg L.P.