Saturday, October 26, 2013
Philips Nixes Audio Business Sale To Funai
FRANKFURT, Germany (Nikkei)--Royal Philips Electronics NV announced Friday that it will cancel the sale of its audio and video equipment business to Funai Electric Co. (6839), citing a breach of contract by the Japanese firm.
No details of the alleged breach were provided. The Dutch electronics giant will request arbitration from the International Chamber of Commerce, seeking damages from Funai, which makes consumer electronics under OEM arrangements.
"We don't believe there was a failure to fulfill (the contract)," a Funai executive stated in response.
Philips announced in January that it would sell off the audio business for 150 million euros, or about 20 billion yen, with the deal slated to conclude in the latter half of 2013. It is now seeking another buyer. The business employs 2,000 personnel and logs annual sales of 1.2 billion euros.
North American television sales drove Funai's growth, but a drop in LCD TV prices caused it to book three straight annual net losses through fiscal 2012. The Philips deal was intended to help it escape its dependence on TVs, which account for about 70% of its sales.
Sales in Philips' audio business are comparable to Funai's overall sales, which totaled 192 billion yen last fiscal year. The Japanese company had aimed to exploit Philips' Europe-oriented sales network. A breakdown of the deal would throw a wrench in its reorganization plans, forcing it to work out a new strategy.
(The Nikkei, Oct. 26 morning edition)