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KKR to form Strategic Partnership with NVC Lighting and Acquire Majority Interest in NVC Lighting´s China Lighting Business
Tuesday 13 August 2019

13 August 2019 - US-based investment firm KKR (NYSE: KKR) and NVC Lighting Holding Ltd. (Stock Code:2222) have signed a deal under which KKR has agreed to set up a strategic partnership with China-based lighting solutions company NVC Lighting and acquire a majority interest in NVC Lighting's China Lighting Business for a total equity value of approximately USD 794m, the firm said.

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.

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 HKD 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 4Q19, subject to customary closing conditions and regulatory and shareholder approvals.

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 USD 4.5bn 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.

NVC Lighting is a lighting solutions company in the PRC. It designs, develops, produces, markets and sells a range of lighting products, with a strong focus on energy-saving and health-promoting lighting products.

Currently NVC Lighting is principally engaged in the design, development, production, marketing and sales of lighting products and certain non-lighting products in both the PRC market and international market. The businesses, by geographical locations, include its lighting business in China, non-lighting business in China, China ODM business and international business.

After the transaction, NVC Lighting will be primarily engaged in its non-lighting business in China, China ODM business and international business, which includes the design, development, production, marketing and sales of lighting products.

Paul, Weiss, Rifkind, Wharton and Garrison LLP, Fangda Partners and Kirkland and Ellis acted as legal advisors to KKR. Freshfields Bruckhaus Deringer acted as legal advisor and Deloitte and Touche Corporate Finance Ltd. acted as financial advisor to NVC Lighting.
Date Published: 13/08/2019
Target: NVC Lighting/China Lighting Business/majority stake
Country: China
Deal Size: 794m (USD)
Sector: Electronics
Type: LBO
Financing: Cash
Status: Agreed
Vendor: NVC Lighting Holding
Buyer: KKR
Buyer Advisor: Paul, Weiss, Rifkind, Wharton and Garrison , Fangda Partners , Kirkland and Ellis