Philips and Chinese investment house Go Scale Capital have ended their talks on the takeover of Philips’ Lumileds unit following a negative ruling from US regulators.

The €2.6bn deal was announced last March and would have given the Chinese firm an 80.1% stake in the lighting unit. Philips is trying to reduce its involvement in the lighting business.

The Dutch multinational said in a statement on Friday that ‘despite the extensive efforts of Philips and Go Scale Capital to mitigate the concerns of the committee on foreign investment in the United States, regulatory clearance has not been granted for this particular transaction’.

No reason given

‘I am very disappointed about this outcome as this was a very good deal for both Lumileds and the Go Scale Capital-led consortium,’ said Philips chief executive Frans van Houten in a statement.

The company will now look for other strategic options, Van Houten said.

According to Fortune magazine, the committee is ‘traditionally sensitive about control of high-tech companies in the US passing into Chinese hands’. However, it has never explained ‘why a business that makes relatively straightforward LED panels and lights for the car sector should be protected in this way’.

A Philips spokesman declined to comment when asked by Fortune about industry speculation that the unit may have developed infrared or sensory technologies that could be used in advanced security applications.