Philips cancels $207m sale of entertainment business

Written By Unknown on Sabtu, 26 Oktober 2013 | 21.43

THE HAGUE: Dutch group Philips said it is terminating the 150-million-euro ($207 million) sale of its entertainment business to Japan's Funai, alleging breach of contract.

"Philips will take legal action to recover damages caused by breach of contract by Funai," the company said in a statement.

Philips said in January it was selling its entertainment business to long-term partner Funai in order to focus further on health products.

Under the deal, Funai was to pay 150 million euros plus an unspecified licence fee to use the Philips brand in audio, multimedia and accessories for an initial period of five and a half years, with an option to renew for five years.

That deal was to be closed by the end of 2013, while the video business was to be transferred in 2017 because of Philips' existing licence arrangements.

The Eindhoven-based Philips said it would rename its entertainment business WOOX Innovations and would seek a new buyer.

"We regret that we have to take this action, but we do so to protect our business and the interests of all our stakeholders," said Philips Chief Executive Officer Frans van Houten.

Philips said that while it had completed preparations for the transfer of the business to Funai, the Japanese company "has refused to take the necessary steps to enable completion of the transaction and the transfer of the business."

It said: "As a result, Philips will start arbitration proceedings in the International Court of Arbitration (ICC) and will terminate the agreement signed in January."

WOOX Innovations will be a standalone company within Philips, headquartered in Hong Kong with over 2,000 employees worldwide and annual sales of 1.2 billion euros.

The announcement does not impact Philips' existing agreements with Funai in North America and Mexico, Philips said.

The company, which employs around 114,000 people globally, has been historically known for its televisions, small appliances and light bulbs, but has sought over the last decade to develop activities in the medical equipment and lifestyle sector.

In April 2012 the company sold its troubled television branch to TPV Technology.


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