Philips keeps options open over TV venture
Royal Philips Electronics, which yesterday announced plans to cut 4,500 jobs worldwide as profits fell last quarter, may pursue other options if no deal is reached to sell the majority of its television business to Hong Kong-listed TPV Technology.
TPV, the world's largest contract manufacturer of personal computer displays, had entered into a so-called term sheet with Philips in April for the proposed acquisition of 70 per cent of the Dutch electronic giant's TV business through a joint venture with the Hong Kong firm. This includes the proposed licensing of Philips trademarks through that venture.
The two parties had aimed to complete their proposed transaction by September 30, but no later than December 31. However, Philips chief executive Frans van Houten described the talks with TPV as 'talking longer than expected.'
'The negotiations with TPV for the creation of the television joint venture are intense and constructive,' Van Houten said yesterday during the announcement of Philips' third-quarter financial results. If no final agreement is reached, Van Houten said, 'Philips will consider its alternative options'. He declined to provide details about these potential alternatives to the TPV takeover.
Philips net profit sunk to Euro74 million (HK$784 million) in the third quarter, compared with Euro524 million a year earlier. Its TV business posted a Euro54 million loss last quarter.
The proposed TPV-Philips joint venture will be responsible for the design, manufacturing, distribution, marketing and sales of Philips' TV business worldwide, excluding the mainland, India, United States, Canada, Mexico and certain countries in South America.
In a filing with the Hong Kong stock exchange in August, TPV chairman and chief executive Jason Hsuan said the company's 'due diligence' about the planned acquisition had been completed. 'Both sides are working on the business plan and contract details,' Hsuan said.
TPV's global sales in the six months to June showed a 2.8 per cent year on year decline to US$5.3 billion. The company's share price was down 1.24 per cent to close at HK$2.39 in trading yesterday.