Philips Sells TV Venture Stake in Focus on Health, Energy
Royal Philips NV (PHIA) will transfer a remaining 30 percent stake in television joint-venture TP Vision as it sells some consumer electronic businesses to focus on more profitable offerings such as cancer scanners and energy savings light bulbs.
In addition to full control, venture partner TPV Technology will also get a one-time 50 million-euro ($67 million) payment, Amsterdam-based Philips said in a statement today.
’’By giving TPV full control, they can drive synergies and act in a faster and more flexible way to changes in the market,’’ said Philips Chief Executive Officer Frans van Houten.
The CEO is pushing the manufacturer into higher-margin areas such as lighting products that save energy and health and wellness offerings to move away from its consumer-electronics past amid competition from Asian rivals such as Samsung Electronics Co. and Sony Corp. (6758) The TP Vision deal gives the CEO a boost after Philips last year had to abandon the sale of DVD and multimedia assets to Funai Electric Co. (6839) amid a dispute between the two companies.
Philips won’t completely withdraw from the TV market as TP Vision will pay Philips annual royalties of 2.2 percent of sales. The minimum annual royalty has been reduced to 40 million euro from 50 million euro. ’’This does more justice to the current conditions on the TV market,’’ Steve Klink, spokesman for Philips, said by phone.
Philips will transfer the stake for a deferred purchase price, similar to when the company sold the previous 70 percent to TPV Technology. (903) This means Philips can claim both payments from March 2018. All outstanding loans and stand-by facilities of the joint business, which was founded after the company in 2011 decided to turn the loss-making division into a joint venture, will be transferred to TP Vision.
The deal is seperate and not connected to the sale of the DVD and multimedia business, according to Philips.
Philips started arbitration proceedings against Funai in October, saying the Japanese company was in breach of contract and responsible for the breakdown of the 150 million-euro disposal. Funai later filed a counterclaim in arbitration court, saying that Philips was unable to complete the separation of the business in a timely fashion and its description of the asset lacked clarity.
Philips rose as much as 0.9 percent to 28.31 euros in Amsterdam trading, the highest level since Jan. 2008, and was almost unchanged as of 2.22 p.m. Philips is scheduled to report full-year earnings on Jan. 28.
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