CHINA TOPIX

Updated 11:29 AM EDT, Tue, Jun 16, 2020

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China’s Sanan Holds Talks with Osram for Possible Takeover

China’s Sanan Optoelectronics Co. conducted preliminary talks with Osram Licht AG regarding a possible takeover or cooperation.

(Photo : NicholasHunt/GettyImages) Osram is the second largest lighting maker globally.

China's Sanan Optoelectronics Co. conducted preliminary talks with Osram Licht AG regarding a possible takeover or cooperation.

The deal with Osram, the second largest lighting maker globally, is likely to be close to $7 billion. The information was revealed in a filing made by Sanam to the Shanghai Stock Exchange.

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This potential takeover or cooperation would have Sanan gain control over Osram. If this materializes, it will add to the already burgeoning number of overseas acquisitions made by Chinese companies this year.

It can be noted that a large number of German firms have also been acquired by Chinese companies, inviting the attention of German regulators.

In its statement, Sanan said there are "significant uncertainties" about the actual finalization of the deal and that no binding agreement has been signed yet. They also did not negotiate for certain factors, such as the price or scope of the transaction.

Sanan, established in 2000, is into the production of indoor and outdoor lightings including traffic lights. Osram, on the other hand, used to be part of Siemens AG but started to operate independently three years ago. It is worth noting, though, that the latter still has 17 percent stake in Osram.  However, it is reported that the company is looking to offload its share. The potential buyers include Chinese firm GSR GO Scale Capital.

If the deal pushes through, it is likely to be the biggest German acquisition by a Chinese company. It is believed that Osram's LED IP cross-licensing is one of the biggest draws for Sanan.

The report pointed out, though, that the Chinese company can only access it after acquiring a majority stake in the company. Meanwhile, the IP rights will let Sanan sell its chips outside of China. 

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