Philips breaks off deal with Funai (Update)

Oct 25, 2013 by Toby Sterling

Royal Philips NV said Friday it has ended a $200-million sale and licensing deal it struck this year with Japan's Funai Electric Co. and will seek damages for breach of contract.

Under the January agreement, Funai was to assume production of Philips' audio, video and media accessories unit and license the right to distribute the products with Philips branding for five years.

Philips said in a statement that the reason the deal is canceled is Funai "refused to take the necessary steps to enable completion of the transaction." Calls to Funai's offices in Osaka and Tokyo went unanswered.

Chief Executive Frans van Houten said the business had been fully separated and prepared for transfer, but it is profitable and will return to Philips "with a lower cost structure" than it had before.

The Hong Kong-based subsidiary has around 1.2 billion euros ($1.66 billion) in annual sales and 2,000 employees, Philips said.

Philips spokesman Joost Akkermans said the company will seek damages from Funai through the Paris-based International Court of Arbitration, as was specified in their January agreement.

He said he could not elaborate on the reasons for the break, due to the pending legal fight. But he underlined that Philips had been operating on the assumption that the deal would close this year as planned as recently as Monday, when Philips reported third quarter earnings.

The break was "triggered by events in the past day, past 12 hours even," Akkermans said.

"Taking this step is regrettable," he said. "But at the same time we felt we had to do it" to protect the interests of the company.

In the statement, CEO Van Houten said the business, previously known as Philips Lifestyle Entertainment, will now be called WOOX Innovations.

It makes home audio systems, headphones, speakers, portable audio and video players, media players, telephones, and an array of cables, chargers and batteries.

Explore further: Clooney slams skittish Hollywood after Sony hack

not rated yet
add to favorites email to friend print save as pdf

Related Stories

Philips loss shrinks in Q4; sheds division (Update)

Jan 29, 2013

Royal Philips Electronics NV Tuesday said it will sell the entertainment division which contains many of the consumer products for which it is best known, such as audio and video equipment, to Funai Electric ...

Philips profits down in Q1 while LED sales jump

Apr 22, 2013

Dutch electronics giant Philips announced Thursday first quarter profits that were down 12 percent from the same period a year earlier, and confirmed that it expected only "modest" growth in the first half of 2013.

Philips first-quarter net income down

Apr 18, 2011

Dutch electronics giant Philips said Monday that first-quarter net income had fallen 31.3 percent and announced a joint venture with Hong Kong-based TPV for its flagging television business.

Philips Q3 earnings rise, growth economies help

Oct 22, 2012

Royal Philips Electronics NV, the maker of electric shavers, light bulbs and medical imaging equipment, saw earnings more than double in the third quarter, thanks to modest growth at all its business lines ...

Philips warns over television sector losses

Mar 28, 2011

Dutch electronics giant Philips warned Monday that it expects losses of between 100-120 million euros ($140-169 million) from its television business as pricing pressures mount.

Recommended for you

Clooney slams skittish Hollywood after Sony hack

1 hour ago

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

Atos shares soar after Xerox acquisition

4 hours ago

Shares in French tech firm Atos soared nearly five percent on Friday as traders cheered the news it had bought the IT wing of Xerox for more than $1 billion.

Two more former Sony workers sue over data breach

20 hours ago

Two more former employees of Sony Pictures Entertainment are suing the company over the massive data breach in which their personal and financial information was stolen and posted online.

Constantly changing online prices stump shoppers

21 hours ago

Online shopping has become as volatile as stock market trading. Wild, minute-by-minute price swings on everything from clothes to TVs have made it difficult for holiday shoppers to "buy low."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.