CLEVELAND, May 29, 2020 /PRNewswire/ — On May 27, General Electric announced that it had agreed to sell its Lighting unit to Savant Systems Incorporated, a business that concentrates on smart home systems, in a transaction said to be valued at around $250 million. This plan reflects the company’s ongoing movement away from consumer-facing goods and commodity products and toward heavy equipment. This unit was General Electric’s last business producing consumer products.
Savant’s purchase of GE Lighting will include a long-term licensing deal for the well-known GE Lighting brand. Savant, which largely operates in professionally installed home automation categories, expects to use the unit to expand its smart lighting elements and use the GE brand as a bridge to the consumer market.
Jennifer Mapes-Christ, Freedonia’s Consumer & Commercial Group Manager notes, “Smart lighting has been a rapidly growing industry, a trend that is likely to accelerate in a world now shaped by the COVID-19 crisis. Consumers and businesses are looking to reduce the need for frequently touched surfaces, including light switches, and smart lighting fits the bill.”
GE, which had been trying to exit the lighting business for a number of years, had previously sold its Current, powered by GE unit, which supplied LEDs and smart lighting solutions, to private equity firm American Industrial Partners in 2019. The remaining Lighting unit, one of GE’s aging, but iconic businesses, invented LED lighting in 1962 and has been producing incandescent bulbs and other light sources since the days of Thomas Edison.
Mapes-Christ called GE’s divestiture interesting, but inevitable. “Although, historically, it’s interesting that a company that originated these products will no longer sell them, this divestiture was just a matter of time given the business conditions and their ongoing shift in corporate strategies.” With the entire lighting industry experiencing heavy downward pricing pressure from incandescent and fluorescent bulbs to LED light sources, lighting manufacturing is a low margin business. Former lighting giants have ceded those segments to lower cost manufacturers in China and elsewhere. Producers have, instead, expanded in higher margin operations relating to high value lighting technology design and smart interconnection services. However, even smart lighting products are not immune as this category is also experiencing sharp downward pricing pressure as the industry expands and continues to innovate.
Additional analysis of the lighting industry can be found in the following Freedonia reports: Smart Lighting in the US, General Purpose LEDs & Other High-Efficiency Lighting, and General Purpose Lighting Fixtures.
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