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China's Sanan says it held talks with Osram on possible purchase

Tuesday, October 11, 2016 - 08:07
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Lighting maker Sanan Optoelectronics Co Ltd said it has held talks with Germany's Osram Licht AG about a possible acquisition, raising the possibility of a deal that would add to what's already a record year for Chinese purchases overseas.

[SHANGHAI] Lighting maker Sanan Optoelectronics Co Ltd said it has held talks with Germany's Osram Licht AG about a possible acquisition, raising the possibility of a deal that would add to what's already a record year for Chinese purchases overseas.

Sanan had an "initial communication" with Osram on a potential acquisition or cooperation and met Osram once, according to a statement Monday from the Chinese company to the Shanghai Stock Exchange.

Sanan didn't provide details about the status of the talks, saying that none occurred on details including price and no binding documents have been signed.

Should a purchase be completed, the Chinese company would gain control of a German high-end lighting maker that makes products such as the headlights that go into the latest BMW 7-series cars. A deal would build on the more than US$190 billion in foreign acquisitions that Chinese companies have announced this year, according to data compiled by Bloomberg.

It would also add to a series of Chinese purchases of German industrial companies that has raised concerns among politicians in the European country.

There are "significant uncertainties" on whether a deal will be reached, Sanan said in the statement. Spokesmen for Osram and Siemens declined to comment.

Osram shares closed 1.6 per cent lower at 56.81 euros in Frankfurt, putting gains since the start of the year to 46 per cent. and giving the company a market value of 5.9 billion euros (S$9.1 billion). Sanan has been suspended from trading in Shanghai since late September after dropping 21 per cent in 2016.

Sanan, established in 2000 on the southeastern Chinese island of Xiamen, makes products that go into indoor and outdoor lighting, as well as traffic lights and aerospace. It listed on the Shanghai stock exchange in 2008.

Munich-based Osram was spun off by Siemens AG three years ago. Europe's biggest engineering company, which still owns 17 per cent of Osram shares, is considering offloading its remaining stake to potential buyers including Chinese investor GSR GO Scale Capital, people familiar with the talks said last month.

Selling the remainder of Osram would cut Siemens's ties with one of its few remaining consumer-facing assets after a decade spent sharpening its focus on industrial applications like high-speed trains, hospital equipment and products for the energy industry.

Any Siemens exit from Osram would come after a souring of relations during the past year between the companies' management. Siemens chief executive officer Joe Kaeser publicly questioned his counterpart's decision to invest heavily in a manufacturing facility in Malaysia to make semiconductor chips for light-emitting diodes, a plan that also took Osram investors by surprise and weighed on the stock price.

Since the spin off, Osram has cut more than 7,800 jobs and in July agreed to sell its general lamps unit to a Chinese consortium including LED-maker MLS Co for 400 million euros to concentrate on technology for buildings, cars and cities.

BLOOMBERG