Philips has decided that there just isn't any money in home entertainment, and as such is flogging off the remainder of its interests to Funai for $201 million. It had already sold its North American TV and DVD operations to the Japanese company back in 2008, but will now package off its whole Lifestyle Entertainment division, which includes global disc players and its Fidelio high-end audio outfit. Instead, Philips will concentrate on profitable sectors such as lighting and healthcare -- so the sooner it can develop a bulb that can kill the sniffles, the better.
Amsterdam, the Netherlands – Royal Philips Electronics (NYSE: PHG, AEX: PHIA) today announced that it has signed an agreement regarding the transfer of its Lifestyle Entertainment business (Audio, Video, Multimedia and Accessories) to Funai Electric Co., Ltd (TSE/OSE 6839). Under the terms, Funai will pay a cash consideration of EUR 150 million and a brand license fee, relating to a license agreement for an initial period of five and a half years, with an optional renewal of five years. The deal for the Audio, Multimedia and Accessories businesses is expected to close in the second half of 2013. The Video business will transfer in 2017, related to existing intellectual property licensing arrangements. The gain on the transaction will be recorded at the closing date.
The transaction is subject to customary conditions, including regulatory filings and works council procedures. The Remote Control activities, which are predominantly business-to-business, are excluded.
"With this transaction we are taking another step in reshaping the Consumer Lifestyle portfolio and transforming Philips into the leading technology company in Health and Well-being," said Philips Chief Executive Officer Frans van Houten. "I am confident that today's agreement with Funai, our partner for over 25 years, will create a promising future for Philips Audio, Video and Entertainment, and continuity for our customers. It will leverage Philips' strong brand, strength in innovation, and leadership position in these businesses, with Funai's strong presence in North and Central America - and Japan, and its supply and manufacturing expertise."
"This is truly an exciting time for us at Funai," said Funai President and CEO, Tomonori Hayashi. "This transaction will allow us to continue moving forward and grow as a global company. We will benefit from Philips' legendary know-how and innovation, as well as the excellent talent they have in place around the world, allowing us to work as a team to leverage and grow the Philips brand in Audio, Video and Entertainment. Additionally, this will give Funai the opportunity to meet our goal of expanding our business into markets including Brazil, Russia, India and China."
"With this agreement and the joint venture for Philips Television, the Consumer Lifestyle sector will further focus on Health and Well-being. The portfolio, consisting of Personal Care, Health & Wellness, Domestic Appliances and Coffee, delivered high single-digit growth in 2012," said Philips Consumer Lifestyle Chief Executive Officer Pieter Nota. "Philips has a proud heritage in Audio, Video, Multimedia and Accessories, and today's agreement with Funai ensures that this business can continue to deliver great Philips-branded innovations to consumers around the world."
Philips Audio, Video, Multimedia and Accessories make up the Lifestyle Entertainment business group within Philips Consumer Lifestyle. This business group is headquartered in Hong Kong and employs approximately 2,000 people worldwide.
Today's agreement does not impact any of Funai's existing brand licensing agreements with Philips.