Royal Philips Electronics signed an agreement to transfer its Lifestyle Entertainment business (audio, video, multimedia, and accessories) to Funai Electric Co., Ltd. It marks the end of an era in the consumer electronics industry, where Philips historically was a technology pioneer.
Funai, based in Osaka, will pay cash consideration of EUR 150 million and a brand license fee, which covers an initial licensing period of 5-1/2 years and provides an optional renewal of 5 years. 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 to accommodate existing intellectual property licensing arrangements.
"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 transaction will allow us to continue moving forward and grow as a global company," said Funai President and CEO, Tomonori Hayashi. "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."
"The Consumer Lifestyle sector will further focus on Health and Well-being. The portfolio, consisting of Personal Care, Health & Wellness, Domestic Appliances and Coffee, delivered high single-digit growth in 2012," said Philips Consumer Lifestyle CEO Pieter Nota.
Philips Audio, Video, Multimedia and Accessories make up the Lifestyle Entertainment business group within Philips Consumer Lifestyle. The business group is headquartered in Hong Kong and has approximately 2,000 employees worldwide.
Philips invented some of the consumer electronics industry's blockbuster technologies in decades past - the compact disc, for one - and over its history was a pioneer in bringing many CE products to consumers: radio, TV, VCRs, and many more.
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