Philips is to exit the audiovisual equipment business. The Dutch consumer electronics giant has agreed to sell its lifestyle entertainment business, comprising audio, video and multimedia equipment and accessories, to its existing partner, Japan’s Funai, for €150 million in cash and a brand licence fee.
Philips’ deal with Funai includes a brand licence fee to cover a five-and-a-half year licensing agreement between the pair with an optional renewal of five years after that.
Philips’ audio, multimedia and accessories businesses are expected to transfer to Funai on completion of the deal in the second half of this year, while the video business will be transferred in 2017, with the delay related to existing intellectual property licensing arrangements between the pair.
With the divesting of its media activities, Philips plans to focus its consumer activities on health and well-being. The businesses being sold are part of the Philips Consumer Lifestyle unit headquartered in Hong Kong that employs about 2,000 people worldwide.
“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 CEO 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.”
Philips posted a net loss of €355 million in the fourth quarter, pushed into the red by a €509 million fine from the European Commission related to the cathode-ray tubes business that Philips said it divested to an independent joint venture in 2001.