Royal Philips NV (PHIA) terminated an agreement to sell its Lifestyle Entertainment unit to Funai Electric Co., dealing a blow to Chief Executive Officer Frans Van Houten’s efforts to phase out audio and video offerings.
The Amsterdam-based company said it ended the agreement because of a breach of contract by Funai. Philips will take legal action to recover damages, it said in a statement today. The stock dropped as much as 2.2 percent.
Philips said it will now look into other opportunities for the audio, video, multimedia and accessories business, while continuing to run it as a standalone entity.
Philips this year agreed to transfer the business, which includes DVD players, to Funai Electric for a cash consideration of 150 million euros ($207 million) and a brand license fee. Van Houten is trying to expand more profitable businesses such as LED lighting, health-care equipment and wellness offerings, while phasing out the audio and video devices that are the heritage of the 122-year-old company.
To contact the reporter on this story: Simon Thiel in London at firstname.lastname@example.org
To contact the editor responsible for this story: Simon Thiel at email@example.com