Philips Will Not Transfer Its Audio, Video And Multimedia Business To Funai
Philips will terminate a $200 million sale and licensing deal with Funai Electric, following breach of contract by Funai.
Philips said it would take legal action to recover damages caused by Funai.
The Dutch company will investigate other opportunities for the Audio, Video, Multimedia and Accessories business, while continuing to run this business within Philips operating with a lower cost structure, as a standalone entity called WOOX Innovations.
"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. "Year to date, our carved-out Audio, Video, Multimedia, Accessories business shows a positive net income and has leading market positions in areas like home cinema sound, docking speakers and headphones. As WOOX Innovations, the business will continue to bring great new products to the market, while we investigate other opportunities to give this business a great future."
Philips had signed an agreement regarding the transfer of its Audio, Video, Multimedia and Accessories business to Funai on January 29, 2013. Under the agreement, Funai was to assume production of Philips' audio, video and media accessories unit and license the right to distribute them with Philips branding for five years. Since signing, Philips has been working to prepare the business for transfer in the second half of this year; this process has now been completed. However, Philips says that in the final preparation phase, Funai has refused to take the necessary steps to enable completion of the transaction and the transfer of the business. 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 and with over 2,000 employees worldwide, WOOX is a business with EUR 1.2 billion in sales.
Philips says that the termination of the agreement with Funai Electric Co., Ltd does not impact Philips' existing agreements with Funai in North America and Mexico.
The Dutch company will investigate other opportunities for the Audio, Video, Multimedia and Accessories business, while continuing to run this business within Philips operating with a lower cost structure, as a standalone entity called WOOX Innovations.
"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. "Year to date, our carved-out Audio, Video, Multimedia, Accessories business shows a positive net income and has leading market positions in areas like home cinema sound, docking speakers and headphones. As WOOX Innovations, the business will continue to bring great new products to the market, while we investigate other opportunities to give this business a great future."
Philips had signed an agreement regarding the transfer of its Audio, Video, Multimedia and Accessories business to Funai on January 29, 2013. Under the agreement, Funai was to assume production of Philips' audio, video and media accessories unit and license the right to distribute them with Philips branding for five years. Since signing, Philips has been working to prepare the business for transfer in the second half of this year; this process has now been completed. However, Philips says that in the final preparation phase, Funai has refused to take the necessary steps to enable completion of the transaction and the transfer of the business. 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 and with over 2,000 employees worldwide, WOOX is a business with EUR 1.2 billion in sales.
Philips says that the termination of the agreement with Funai Electric Co., Ltd does not impact Philips' existing agreements with Funai in North America and Mexico.
