Philips is to sell off its home entertainment business, including hi-fis and DVD players, to Japan's Funai Electric.
Philips has signed an agreement regarding the transfer of its Lifestyle Entertainment business (Audio, Video, Multimedia and Accessories) to Funai Electric Co., Ltd. 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. Philips expects 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 company wants to focus on its healthcare, light bulbs and home appliances businesses as part of its "Accelerate!" restructuring plan.
"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."
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.
Philips said that the new agreement does not impact any of Funai?s existing brand licensing agreements with Philips.
Philips also reported a 355 million Euro loss for the last three months of 2012.
The loss was expected and was largely due to a 509 million Euro fine imposed on the company last year by the European Commission for participating in a cartel to fix prices in the television business.
Philips announced last year that it was transferring its television unit to a new joint venture arrangement with Hong Kong's TPV.