A new round of mergers and acquisitions in the LED industry is about to begin

This year, M&A has become the most frequent commercial activity in the global LED industry. The story of “strong and strong”, “big fish eating small fish” and “small fish eating shrimp” seems to be constantly being staged and has become a constant game rule in the ever-changing commercial society.

On August 9, 2012, an up-stream M&A case in Taiwan attracted the attention of the market. Jingyin Optoelectronics and Guangsheng Optoelectronics become a subsidiary of Jingyin Optoelectronics through a share conversion method, and the ratio of shares exchanged is 4.58 shares of Guangsheng Optoelectronics' common shares, 1 wafer of repurchased Jingyuan Optoelectronics common shares, and the total transaction amount reaches 4 billion yuan. Yuan New Taiwan Dollars.

Epistar has acquired four LED chip manufacturers in the past seven years and is firmly positioned in the world leader in LED chips. Prior to this, Epistar has also successively acquired Taiwan’s Guolian Optoelectronics, Yuansa Optoelectronics, and Lianyong Optoelectronics. M&A also seems to be one of the key reasons for the rapid growth of Epistar.

Epistar's chairman, Li Bingjie, revealed in an interview with outsiders that the main reasons for mergers and acquisitions were to expand production capacity and markets, obtain new technologies and own patents of other parties.

The actions of the two mergers and acquisitions of the wave giants often herald the industry trend.

From 2007 to 2010, it can be regarded as the first wave of mergers and acquisitions in the LED industry.

In 2007, Philips acquired Color Kinetics, a professional LED manufacturer based in Boston, USA, for a total purchase price of 592 million Euros; in 2009, Philips announced that it had reached an acquisition agreement with Luce, the largest LED lighting manufacturer in Europe; December 2010 Philips also announced the acquisition of the design, manufacture and distributor of LED, traditional entertainment lighting and lighting control solutions - Jialishi (Group) Co., Ltd.; March 12, 2007, CREE Corporation for 200 million US dollars, the acquisition price Huagang Optoelectronics Group has its own name “Huagang” Huagang Optoelectronics Parts Co., Ltd., including Huagang International Trading Co., Ltd., Huizhou Huagang Optoelectronics Co., Ltd., Huagang Optoelectronics (Shanghai) Co., Ltd. and Huagang Japan Co., Ltd. the company.

With the rapid development of the LED industry, since 2011, the second wave of mergers and acquisitions has been surging.

On August 18, 2011, CREE announced the acquisition of Ruud Lighting Inc., a traditional lighting manufacturer, for US$583 million in cash plus a share swap.

Then, in September 2011, GE Lighting announced the official completion of the acquisition of Lightech, a privately owned company that is a leader in the lighting technology industry and is headquartered in Tel Aviv, Israel.

As an industry leader in the provision of lighting industry LED electronic drivers and halogen lamp transformers, Lightech's business teams span Europe, the United States and Asia.

Maryrose Sylvester, president and chief executive officer of GE Lighting, said: “Complete acquisition of Lightech, the global leader in LED electronic driver, has absorbed our top professionals. The company's drives meet the demand for efficient power supply and are further optimized for GE lighting LED systems. Indispensable part."

Since then, in October 2011, OSRAM acquired Encelium Technology Corp., a wholly owned subsidiary of Townsend Ventures, to increase its investment portfolio in lighting control, energy management systems and software.

OSRAM believes that the acquisition of the LED business will essentially be aided by this acquisition and is an important step towards becoming a leading LED lighting solutions provider globally.

“A large number of acquisitions and consolidations by international large companies are focused on long-term goals. The targets of mergers and acquisitions are companies that are technologically forward-looking and have a certain market share. It is particularly noteworthy that the focus of these multinational mergers and acquisitions has begun to shift. Downstream subdivision applications, in order to break through the market segments.” Hong Yannan, Chairman of Heshan Guangmingyuan Lighting Electric Co., Ltd. said.

A good attitude is the key to "selling your own children. This is a mentality of the acquired party." Tong Ziping, Vice President of Tongchuang Weiye Venture Capital Co., Ltd. stated that as an investor, M&A opportunities need to be viewed from the perspective of maximizing profits and maximizing industry.

At the beginning of this year, Guangmingyuan Lighting Electric Co., Ltd. acquired two mature LED companies in Xiamen and set up Xiamen Guangmingyuan Optoelectronic Technology Co., Ltd. to focus on the special light source explosion-proof lights and mobile lighting of LED platforms.

"How to realize the complementary advantages of resources is the focus of M&A," said Hong Yannan. “At present, most LED companies have this phenomenon: There is no scale for technology, there is a lack of technology, and the original intention of our acquisition is to achieve both. Complementary advantages to achieve a win-win situation."

“It's important to be happy. From another point of view, people will provide your child with an opportunity to further study abroad and educate your child or you.” Senior Engineer LEDCEO Zhang Xiaofei retorted, “Of course, the acquisition Don't be too aggressive and sincere."

For traditional lighting manufacturers, mergers and acquisitions of LED companies is also one of the effective ways to quickly cut into the LED.

“These two years are the key period for the promotion or elimination of LED brands. Everyone is looking for ways to find new profit growth points. We also acquired an export company this year to support and develop new indoor commercial lighting with the help of the order profits it acquired. Market.” Li Xiaoping, general manager of Zhongshan Ouman Technology Lighting Co., Ltd. told reporters.

According to Li Xiaoping, Auman has been focusing on the field of outdoor decorative lighting for the past eight years. It is precisely this exporting company that can bring “instant” channels and orders before embarking on the idea of ​​entering commercial lighting indoors. “We all know that the new product line launched, especially the construction of LED channels, is 'burning money'. The first year or even longer may be in the input and difficult to have large output.”

In the past few years, BDO Runda (002005.SZ) is a typical case of entering the LED industry through mergers and acquisitions. As an acquired party, Shenzhen Ruituo Display Co., Ltd. chose to accept BDO Runda's M&A plan when its overseas market is growing. Reyto Display General Manager Shi Yaozhong said frankly: “I was once depressed and I feel that I am no longer running my own business. The psychology of dressing another person has continued for a long time.”

However, the attitude of Shi Yaozhong soon changed. "The choice to be acquired by BDO Runda is not due to the poor management of Ruituo, but rather to the search for rapid development. If Ruituo continues to develop according to its original model, it will be difficult to achieve leapfrog development." From the perspective of the company's long-term development, relying on the platform resources of listed companies can bring greater opportunities to Retop, which is a win-win situation for both parties.

GLII statistics show that in the first half of 2012, Rio Tinto demonstrated revenue of RMB 250 million, which accounted for 81.97% of BDO Runda's application product revenue.

Difficulties in mergers and acquisitions and integration are even harder to doubt. Seizing the market through mergers and acquisitions is an immediate option, but the integration after M&A is no less difficult than developing a new market segment.

"After half a year, the two companies are still merging cultures and values. It's like two young men and a woman have just formed a family. The new family needs a period of integration to make the following small days better. "Hong Yannan said," We will not switch quickly and we will choose to follow a step-by-step approach."

According to Liu Jianyun, general manager of Shenzhen Lihe Qingyuan Venture Capital Management Co., Ltd., the difficulty in mergers and acquisitions lies in the integration. In particular, mergers and acquisitions between Chinese companies and offshore companies have initially appeared beautiful and the final results have been unsatisfactory. The success rate is not very high.

Liu Jianyun believes that first of all, mergers and acquisitions make clear what the intentions and objectives of mergers and acquisitions are, whether they want technology or the market or they want teams, and what they want to focus on; second, the genes of the two companies are consistent, and each company has its own Corporate culture, values, and mode of operation, if the employees of the acquiring party do not agree with the culture of the new owner, then the integration of corporate culture, values, etc. may be something that the acquirer needs to do. In the end, it is the importance of people. Good things don't get good results. They are related to people. From the perspective of investment, we must first strengthen professionalism and invest less in the industry chain than we do.