Philips has terminated its agreement to transfer Audio, Video, Multimedia and Accessories business to Funai following breach of contract.
Philips will take legal action to recover damages caused by Funai. Philips will proceed to investigate other opportunities for the Audio, Video, Multimedia and Accessories business, while continuing to run this business within Philips operating with a significantly lower cost structure, as a standalone entity called WOOX Innovations.
“We regret that we have to take this action, but we do so to protect our business and the interests of all our stakeholders,” said Philips CEO Frans van Houten.
“Year to date, our carved-out Audio, Video, Multimedia, Accessories business shows a positive net income and has leading market positions in areas like home cinema sound, docking speakers and headphones. As WOOX Innovations, the business will continue to bring great new products to the market, while we investigate other opportunities to give this business a great future.”
Philips announced that it had signed an agreement regarding the transfer of its Audio, Video, Multimedia and Accessories business to Funai on January 29, 2013. Since signing, Philips said it “has been working hard to prepare the business for transfer in the second half of this year; this process has now been completed.
“In the final preparation phase, Funai has refused to take the necessary steps to enable completion of the transaction and the transfer of the business. As a result, Philips will start arbitration proceedings in the International Court of Arbitration (ICC) and will terminate the agreement signed in January.”
WOOX Innovations will be a standalone company within Philips, fully focused on delivering meaningful innovation in connected entertainment. Headquartered in Hong Kong and with over 2,000 employees worldwide, WOOX is a business with EUR 1.2 billion in sales.
Today’s announcement does not impact Philips’ existing agreements with Funai in North America and Mexico.
