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Dutch-based Royal Philips Electronics (Philips) has announced an agreement regarding the transfer of its Lifestyle Entertainment Business (Audio, Video, Multimedia and Accessories) to Japan’s Funai Electric Company. Terms of the deal are reported to be 150 million euros ( a bit over $200 million US) and a 5-1/2 year licensing agreement. The licensing agreement also involves an optional second five years. The Audio, Multimedia, and Accessories business is expected to transfer in the second half of 2013. The Video business will transfer in 2017, after the expiration of existing intellectual property licensing arrangements.
Going forward, Philips will concentrate on its Health & Well-being portfolio, which includes Personal Care, Health & Wellness, Domestic Appliances and Coffee; the remaining portfolio showing high single-digit growth in 2012. Philips also has a strong presence in medical equipment and lighting products. The division being sold experienced very high losses in the fourth quarter of 2012. Philips has over 80 years experience in Consumer Electronics, and has many innovations under their belt. The audio cassette, video recorder, and compact disc were all Philips innovations. They also were influential in the rise of the BluRay and DVD formats. The widespread shift to digital media formats and online enterainment has left Philps in a postion of no longer being able to effectively compete.
Funai Electric Company, Ltd. is a major original equipment manufacturer (OEM) supplier for appliance, consumer electronic, computer, and computer peripheral companies on a global basis. This agreement also gives Funai entry into markets that they currently do not have a presence, such as Brazil, Russia, India and China. The deal is subject to regulatory and administrative approval. The Phiilips press release can be viewed here. The release also includes a link to a video of Philips CEO Frans Von Houten commenting on the agreement with Funai.