Philips' Genlyte buy seen pressuring GE in U.S.

Amsterdam-based Philips (NYSE: PHG) announced Monday it has agreed to purchase U.S.-based Genlyte (NASDAQ: GLYT) group for $2.7 billion.

The deal values Genlyte at about $95.70 per share, or about a 50% premium over Genlyte's Friday closing price. Genlyte's shares surged $31.50 (just over 50%) to $94.17 in Monday morning trading. Philips gained 24 cents to $42.46.

Philips said the deal will strengthen its position in energy-efficient lighting, adding that with Genlyte it will surpass rival General Electric (NYSE: GE) as the largest lighting company in North America. GE's shares fell 14 cents to $37.53.

Stock Analysis: It looks like Philips has executed a smart purchase at a fair price. In Genlyte, Philips will gain greater access to U.S. distributors, which will increase sales of its fluorescent and next-generation light-emitting diode (LED), energy-saving light bulbs. The deal will also add to Philips's manufacturing capacity. Philips has the light bulb / lighting lead in Europe, but (understandably) it trails GE in North America. Hence the Genlyte deal underscores its commitment to compete on both continents with GE, as the market for energy-efficient lighting expands at a healthy rate in the years ahead.