Philips is entering a 30/70 joint venture partnership with computer monitor maker TPV that could eventually see its entire TV business sold to the Hong-Kong based business.The value of the deal has not been disclosed but the company said its 3600 strong employee base would be transferred to Hong Kong, and job losses within the TV business could not be ruled out.
Philips has found it increasingly difficult to compete in the TV business, against its Korean counterparts, LG and Samsung.
The Dutch giant’s TV unit makes up less than 10 percent of group sales, and has gone from being a global leader to a loss making burden, with losses of almost a billion euros since the beginning of 2007, according to Reuters.
The company said TPV, which controls 33 percent of the global computer monitor market, will purchase 70 percent of the shares in the joint venture for a deferred purchase price, equating to four times the joint venture’s EBIT over the years 2012 until Philips exercises its right to receive the purchase price.
Philips also retains the option to sell its remaining 30 percent stake to TPV for the same terms after six years.
The Dutch company currently licenses its TVs to TVP in China, Funai in the United States and Videocom in India.
The move is part of a strategic plan by new CEO, Frans Van Houten, who aims to focus the company’s attentions in health and well being.
Van Houten is undertaking an internal re-structure of the company, assessing profitability at the European consumer electronics’ giant, aimed at selling off its underperforming divisions.
The company is also addressing other ‘laggard’ divisions, including audiovisual and multimedia businesses which are being merged into its lifestyle entertainment unit in Hong Kong.
The world’s biggest lighting maker and top three hospital equipment maker is also scrutinising recent acquisitions such as lighting fixtures group Genlyte and home healthcare firm Respironics which have ‘not yet shown sufficient synergies’ according to Reuters.
The impact of Japan’s recent earthquake and Tsunami has also disrupted the supply chain for its health and lighting business.
Philips has 400 businesses worldwide.