Two Chinese Listed Companies are Preparing to Bid for GE Lighting Tungsten Filament Business?

According to Reuters, at least two Chinese companies are preparing to bid for GE's remaining lighting assets, which could be worth up to $1 billion.

Sources said that Mulinsen (002745.SZ) and Foshan Lighting (000541.SZ) have been talking with banks about financing possible asset acquisitions and they have been negotiating with lenders.

GE on Monday sent an introduction to the sales process to interested companies. Another source said that a memorandum of information would be issued in a few weeks, followed by the first round of tenders. GE declined to comment.

In fact, it is no secret that GE is ready to sell its lighting business in the industry. On Nov. 13, 2017, the new CEO, Frannari, announced that he would reorganize his business by transferring assets, laying off employees and quitting most of the non-main businesses, and sell more non-main businesses. First of all, he sold his most iconic lighting business in 126 years.

In 1879, Thomas Edison invented the first commercially viable incandescent light bulb. A year later, he founded Edison Light bulb Company and began to produce and sell light bulbs. By 1890, Edison had merged Edison bulbs with most of the other businesses of Edison General Electric Company, and in 1892 with Thomson Houston Electric Company, GE General Electric Company was formed. In 1906, GE Engineer William Coolidge developed a long-lasting, ultra-bright tungsten filament lamp. This great improvement brought the application of tungsten into the lives of millions of households for the first time, and has been influencing today. Since then, GE has become the leader of the lighting industry.

With the emergence of LED lamp, tungsten filament incandescent lamp is gradually replaced. LED is considered to be the biggest lighting revolution since Edison invented electric light bulb. Compared with incandescent lamp, LED lamp is more energy-saving, more earthquake-resistant, and has a long service life. With the decline of price, LED began to enter millions of households. However, many friends may not understand that tungsten is also one of the light source materials of LED.

In the golden age of LED popularization, GE lighting will focus on the production and sale of LED lamps, so it still makes a lot of pots, but now the service life of LED lamps is longer, people's replacement frequency is greatly reduced. After 2015, due to the impact of Chinese manufacturing, the LED lighting market is close to saturation, GE lighting profitability has declined sharply. As a result, the new CEO, Frank Flannery, decided to find a buyer because GE General Lighting could not help GE's re-emergence.

In mid-February 2018, GE reached an agreement to sell the European portion of its overseas lighting business to a company controlled by former executive Jorge Lubauer for an undisclosed amount. This marks the first step in selling lighting. The rest is mainly the United States. Lighting business based on lighting business is part of a broad restructuring plan aimed at divesting assets totalling $20 billion and concentrating the remaining businesses in three core sectors: electricity, aviation and health care.

According to people familiar with the situation, GE's profits in lighting business fell sharply last year, with revenue of nearly $2 billion in 2017, but net profit of only $93 million. (China Tungsten Online: Weiping)

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