Philips Semiconductor: Sold

Philips spins off its chip business. KKR & Silverlake team up on this LBO deal, beating TPG, Bain Capital, Francisco Partners, Blackstone, Apax, etc.

The disposal is part of a group strategy to move from a focus on high volume electronics and implementing a strategy to build a Healthcare, Lifestyle and Technology company with a strong market focus.

It also allows the semiconductor business to focus, and increase market share in four core businesses: mobile and personal; home; automotive and identification; and multimarket semiconductor chips.

As it stands, many of the top consumer electronics companies are conglomerates with their own chip businesses (e.g. SONY, Sharp, Samsung), and for Philips Semiconductor, this was not good news. Philips competes with SONY, Sharp AND Samsung in Television, for example, limiting the success of its home entertainment chips – an area that is seeing a lot of discontinuity and innovation.

Now, free of the parent, the chip-child no longer remains constrained.