AlpInvest joins Philips mega-spinout

AlpInvest is part of a consortium led by KKR and Silver Lake to acquire a majority stake in the semiconductor business of Royal Philips Electronics for roughly €8.3bn.

Kohlberg Kravis Roberts, Silver Lake Partners and AlpInvest Partners will team to acquire an 80.1 percent stake in the semiconductors business of Royal Philips Electronics in a transaction valued at roughly €8.3 billion ($10.6 billion).

Philips will retain a 19.9 percent stake in the standalone semiconductor business, which will continue to be run by its current chief executive, Frans van Houten.

Philips is based in Amsterdam and London.

The semiconductor deal is structured with a €3.4 billion purchase price, the assumption of €4 billion in debt and a value of €0.9 billion for Philips’ remaining stake in the business.

Philips’ semiconductor business employs 37,000 people worldwide. Its 2005 sales were roughly €4.5 billion, according to a statement.

Gerard Kleisterlee, the president and CEO of Philips, said in a statement: “As Philips, we are completing our shift away from running cyclical activities, and can fully focus on building an even stronger company in healthcare and lifestyle around the brand promise of Sense and Simplicity.”

Van Houten is currently a member of the board of Philips in addition to being CEO of the semiconductor business. In a statement, he noted his division’s “strong R&D capabilities and broad intellectual property portfolio”.

KKR and Silver Lake are based in New York and Menlo Park, respectively. AlpInvest is a major private equity investor based in the Netherlands. The firm is one of the biggest backers of private equity funds, although roughly 20 percent of its capital goes directly into private equity deals sponsored by its GP relationships, according to AlpInvest.