By Jonathan Shieber Of DOW JONES NEWSLETTERS Philips Lighting is currently reviewing acquisition prospects and conducting due diligence on two undisclosed companies, according to Kaj den Daas, the chairman of the lighting giant Koninklijke Philips Electronics NV (PHG). Speaking at Dow Jones' Alternative Energy Innovations conference, den Daas said that not only was the company currently conducting due diligence on two small companies for a potential acquisition, but that acquisition was key to Philips' growth. Specifically, the company is looking at control technologies for light emitting diodes, den Daas said in a keynote interview at the conference held in Redwood City, Calif., this week. (This story also appeared in Clean Technology Insight, a newsletter and information service published by Dow Jones & Co.) Daas said that Philips typically takes one of two approaches to new entrants in the lighting market. "They are either infringing on my patents and I sue them, or they have technology that I want and I buy them," den Daas said. The Dutch company has made some big-ticket purchases to gain the upper hand in the U.S. lighting market in recent years. In November 2007, Philips spent approximately $2.7 billion on U.S. lighting fixture manufacturer Genlyte Group, and another $791 million earlier in the year on its acquisition of light emitting diode manufacturer Color Kinetics Inc. Daas said that there are plenty of opportunities for start-ups to carve out a niche in a specific sector of the lighting market and gain some scale to the point where they would be an attractive acquisition target. In all the lighting market is roughly $75 billion, den Daas said, with the U.S. market worth roughly $19 billion. Phillips sells about $3.5 billion worth of lights and lighting technologies in the U.S. As LEDs advance in the marketplace, with their longer lifetime, Philips is actually looking to do more for its customers, providing entire systems and services rather than just the bulb alone, according to den Daas. The reason, he said, was that with longer-lasting LEDs there will be fewer bulb replacements. Still, for all of the promise that light emitting diodes have in terms of their longer lifetimes, the technology is still too expensive and doesn't integrate well with existing lighting fixtures. "We're not there yet," den Daas said of the costly technology. However if start-ups work to develop a new generation of lighting products that can slot into existing fixtures, they will perhaps see Philips open up its wallet with an offer for them. -By Jonathan Shieber, Dow Jones Newswires; 201-938-4305; jonathan.shieber@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=7M4aS1rE8qLXeI8Zfy29Mw%3D%3D. You can use this link on the day this article is published and the following day.
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