LED technology is revolutionizing the lighting industry with favorable secular trends underpinning rapid market penetration, according to the BGL Building Products Insider.  M&A activity remains high as industry participants leverage acquisitions to build scale as the market advances towards intelligent lighting solutions.

The BGL report documents rapidly increasing adoption of LED-based products due to energy savings, longer life, improving light quality, and declining cost. Increased LED penetration and growing demand for connected lighting systems are expected to transform the lighting industry, as the convergence of LED lighting and controls facilitates growth of integrated lighting networks.

Sector capital markets activity suggests a favorable investor outlook. M&A activity is accelerating with increasing participation from strategic and private equity buyers as market dynamics support sustainable growth and demand visibility:

  • In May, Koninklijke Philips N.V. announced plans to sell at least a 25 percent stake in its Lighting Division in an initial public offering (IPO). Philips Lighting is a leading provider of conventional and LED lighting products, systems, and services with revenue of EUR 7.465 billion in 2015.
  • Acquisitive industry players Acuity Brands, Fagerhult, and Eaton have each announced deals during the last six months. Acuity Brands completed the acquisition of Juno Lighting from Schneider Electric SA in December 2015, paying $385 million at a 12.0x multiple of EBITDA.
  • Lighting has attracted interest from private equity, with notable platform acquisitions announced by Cortec Group (Chauvet and Sons), The Provco Group (LumenOptix), Summer Street Capital Partners (Halco Lighting Technologies), and Baird Capital (SloanLED).