Hubbell Inc.’s announcement that it would sell its Commercial and Industrial Lighting business to GE Current, a Daintree company, for a cash purchase price of $350 million was the talk of LightFair last week in New York and is the latest example of the consolidation of the lighting industry.
The industry may not be over the 2019 news that Eaton was selling its Cooper Lighting unit to Signify for approximately $1.4 billion, seven years after buying Cooper Industries and its lighting business for $11.8 billion; the 2018 deal where GE sold its Current Powered by GE lighting business to the American Industrial Partners (AIP) private equity firm; or GE’s 2020 sale of its Home Lighting business unit to Savant Systems, Hyannis, MA.
The Hubbell Lighting business unit includes a large package of well-known lighting lines, and it sells generated approximately $515 million in sales in 2020. These lines included include Area Architectural Lighting, Beacon, Litecontrol, Kim, Columbia, Prescolite, Alera, Dual-Lite, Compass, Hubbell Outdoor Lighting and Hubbell Controls. Progress Lighting was not included in the sale because of its residential focus, according a report in LEDs Magazine.
GE Current’s brands include Albeo, Evolve, Lumination, Arize, Daintree, Forum, Tetra, Trigain, 365DisInFx, Lightgrid and Proline.
“This strategic transaction creates a more focused Hubbell portfolio with higher growth and margin characteristics, and enables us to continue effectively executing on our core strategy of providing reliable and efficient critical infrastructure solutions for Electrical and Utility applications,” said Gerben Bakker, chairman, president and CEO, in the press release.
Manish Bhandari, chief executive officer, Current, said in the release, “We intend to use our combined resources to drive new investments that create solutions for the continuously evolving needs of our customer.
“The values and customer-centric culture of the Hubbell C&I lighting business are well aligned with Current. We look forward to welcoming the Hubbell C&I team.”
After closing, Current and the Hubbell C&I Lighting business will maintain separate agency networks with dedicated resources and distinct brands, according to press release.
One of the interesting aspects of the sale is that Hubbell’s residential lighting assets, including the well-known Progress Lighting brand, was not included. In the Motley Fool transcript of Hubbell’s 3Q 2021 analysts call, William Sperry, executive VP and CFO explained the thinking behind the sale: “The businesses are quite different. The C&I business is an integrated one. It has plants. It has an agent front end that goes to the channel and to the projects.
“The residential (business) is a purchase for resale business. There’s no manufacturing side to it that we have. And the customers are not the ED (electrical distributor) channel, they are big-box retailers, homebuilders, showrooms and a very vibrant e-commerce channel.
“So we have been running the businesses differently. Yes, they’re both lighting, but they’re really not that related. So when we were approached by a strategic (GE Current), the interest was in the C&I side. I think there’s quite a compelling story that GE Current has to make about being a really well-balanced competitor going forward. And so that’s why we did it that way.”
The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close in the first quarter of 2022. The company expects to deploy net proceeds from the sale to accretive bolt-on acquisitions and share repurchases. Morgan Stanley & Co. is serving as financial advisor to Hubbell, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel.