A Chinese consortium is acquiring Ledvance, the general lighting lamps business of Osram of Germany for more than 400 million euros (US$440 million).

Osram said on July 26 that it will also receive unspecified additional payments for license agreements of trade rights.

Ledvance and the consortium – comprising of strategic investor IDG Capital Partners, Chinese lightning company MLS Company and financial investor Yiwu State-Owned Assets Operation Centre – are described as a good fit due to their complementary structure both geographically as well as respective product portfolios. They also have solid financial resources.

A fully guaranteed financing for this transaction is in place and the consortium will fund the purchase price on an all equity-financed basis. After closing of the deal, the consortium is contractually bound to certain financial restrictions concerning debt, liquidity and dividend payments at Ledvance for a period of three years.

Through the transaction, both would respectively benefit from a significantly larger sales and distribution network, as well as sourcing synergies, which would lay the foundation for cooperative future growth.

In connection with transaction, Osram and MLS likewise entered into a strategic supply agreement by which MLS intends to purchase an annual order of LED chips from Osram’s new plant in Kulim, Malaysia, once the production has started.

Osram is investing one billion euro in building the new LED chip plant, which is said to be the largest and latest six-inch LED chip production site in the world.

Credit Suisse was the financial adviser to MLS, while UBS advised Osram. The transaction is expected to close in the course of fiscal year 2017, subject to certain closing conditions and regulatory approval by the relevant authorities.

With the acquisition, MLS is expected to expand its position in the global lightning market, while Ledvance, in turn, will gain improved access to the Chinese market. Based on an agreement with Osram, Ledvance will continue to use the Osram and Sylvania brand names at the product level.

Ledvance and MLS will also be able to develop a cooperative worldwide footprint through this transaction. Ledvance’s products and those of MLS target different users in different territories in emerging and developed markets.