Sanan Optoelectronics plans to jointly acquire major LED manufacturers for RMB 1.7 billion to create synergies and increase the proportion of mid-to-high-end products

Sanan Optoelectronics (12.680, 0.18, 1.44%) (600703.SH), a leading domestic company in the field of compound semiconductors, announced on the evening of August 1 that the company plans to join forces with foreign investor Inari to acquire 100% equity in Lumileds Holding B.V. for US$239 million in cash (approximately RMB 1.706 billion based on the exchange rate in July 2025). The subject company is a world-renowned LED company registered in the Netherlands.

Sanan Optoelectronics stated that this acquisition can enrich the company’s product line in automotive lights and special application packaging modules, and help the company accelerate the upgrading of mid-to-high-end products.LED product proportion. The company will have strong synergy with the target company in terms of customers and channels, and will have more advantages in international competition.

In the first quarter of 2025, Sanan Optoelectronics achieved operating income of 4.312 billion yuan, a year-on-year increase of 21.23%; net profit attributable to the parent company was 212 million yuan, a year-on-year increase of 78.46%. The company's revenue and net profit achieved double growth.

To integrate into the international high-end supply chain system through acquisitions

Sanan Optoelectronics announced on August 1 that the company and overseas investors Inari (hereinafter collectively referred to as the "buyer") and LumiledsHolding B.V. (hereinafter referred to as the "Target Company") signed a "Share Purchase Agreement", and the buyer planned to acquire 100% of the equity of the target company held by it from the counterparty. In this transaction, the target assets are calculated based on "zero cash and zero liabilities", and the enterprise value is US$239 million. The final purchase price will be determined based on the data in the financial statements on the final delivery date and the relevant provisions of the "Share Purchase Agreement".

In order to ensure the smooth implementation of this transaction and the subsequent daily operations of the target company, Sanan Optoelectronics and Inari plan to contribute 74.5% and 25.5% through their respective subsidiaries with their own funds and self-raised funds.The parties will jointly invest US$280 million to establish a Hong Kong SPV in Hong Kong, which will be used to pay the transaction consideration, various transaction costs and supplement the target liquidity. The two parties will sign a "Cooperation Agreement" and its attachments.

The subject company is a world-renowned LED company registered in the Netherlands. The target company focuses on the production and sales of mid-to-high-end LED products in the fields of automotive lights, camera flashes, and special lighting. After years of intensive cultivation and innovation, it has a complete production process, diverse product categories, and extensive customer resources in the LED field. After the completion of this transaction, Sanan Optoelectronics will indirectly hold 74.5% of the equity of the target company and include it in the scope of consolidated statements. For the target companySanan Optoelectronics said that the company's losses in recent years were mainly due to factors such as the impact of the early macro-environment and downstream market demand, and the target company's maintenance of high production, operation and service costs.

Sanan Optoelectronics stated that this acquisition can enrich the company's product line in automotive lights and special application packaging modules, and help the company accelerate the increase in the proportion of mid-to-high-end LED products. In addition, this acquisition can also increase the flexibility in new product design, which is of great significance to the company's future development and progress, product design flexibility and the development of international markets. At the same time, the target company has mature production bases and teams in Singapore and Malaysia. After this acquisition, Sanan Optoelectronics can quickly obtain high-quality overseas production bases to ensure the futureSupplying goods to overseas customers is of great significance to the company's international strategic development and expansion of overseas revenue and performance.

Sanan Optoelectronics can also rely on the mature channel network and customer service system built by the target party in overseas markets to quickly integrate into the international high-end supply chain system, obtain high-quality customer resources from the target, and shorten the international customer development cycle, which is conducive to improving the company's international brand power and quickly introducing the international supply chain system.

After the completion of this transaction, Sanan Optoelectronics will also allocate shared resources to optimize the cost structure of the target company. The supply chain systems of the company and the target company have a high degree of overlap. After the merger, the bargaining power and management efficiency of the supply chain can be effectively improved, and cost control can be effectively achieved. The company will have a strong synergy with the target company in terms of customers and channels, and will have more advantages in international competition.

The research and development of fourth-generation semiconductor materials has been laid out

As a leader in the field of compound semiconductor materials and devices, Sanan Optoelectronics focuses on the research, development, production and sales of various new compound semiconductor materials and related products. The company's core business covers epitaxial wafers and chips made of gallium nitride, gallium arsenide, silicon carbide, indium phosphide, aluminum nitride, sapphire and other materials. The core products include LED epitaxial chips, integrated circuit products and LED application products.

In terms of performance, in 2024, Sanan Optoelectronics achieved operating income of 16.106 billion yuan, a year-on-year increase of 14.61%; net profit attributable to the parent company was 253 million yuan, a year-on-year decrease of 31.02%.

In the first quarter of 2025, Sanan Optoelectronics achieved operating income of 4.312 billion yuan, a year-on-year increase of 21.23%; net profit attributable to the parent company was 212 million yuan, a year-on-year increase of 78.46%; net profit after non-attribution to the parent company was 74.69 million yuan, a year-on-year loss; net operating cash flow was 596 million yuan, a year-on-year increase of 10.2%.

In the first quarter of 2025, the company's various businesses have developed, and growth has continued in the fields of LED and integrated circuits, especially high-end LEThe market share of D products further increased, driving overall revenue growth.

While releasing the important acquisition plan, Sanan Optoelectronics released the company's first annual sustainable development report. The report shows that in 2024, Sanan Optoelectronics' energy consumption will be reduced by 1277.82 tons of standard coal, and the total renewable energy consumption will be 8834.12 tons of standard coal; 10 subsidiaries have successfully obtained SO14001 Environmental management system certification; the total amount of recycled water reached 3.3409 million tons, recycled water accounted for 24.97%, and the wastewater discharge compliance rate was 100%. In terms of social contribution, the company has won the first prize of the National Science and Technology Progress Award twice and the second prize of the National Science and Technology Progress Award once.

Sanan Optoelectronics also revealed in a recent investor interaction that the company continues to promote the forward-looking technology layout of compound semiconductors, and its subsidiary Hunan Sanan has deployed the research and development of fourth-generation semiconductor materials such as gallium oxide and diamond. Currently, Hunan Sanan has a 6-inch silicon carbide supporting production capacity of 16,000 pieces/month, an 8-inch silicon carbide substrate production capacity of 1,000 pieces/month, and an epitaxial production capacity of 2,000 pieces/month. The 8-inch silicon carbide chip production line is under construction.