Philips announced last week that it is cancelling the sale of its audio, video, accessories and multimedia business to Japanese consumer electronics company Funai, stating the reason as a breach of contract. Furthermore, Philips will be seeking legal action to recover damages from this breach.
Instead, from Monday 4th November Philips Lifestyle Entertainment will become a stand alone subsidiary within the company called WOOX Innovations, with headquarters being in Hong Kong.
Both Philips and Funai announced they had signed an agreement detailing the sale of the Philips audio/video business to Funai back in February 2013. However in the final preparation phase of the sale it is perceived by the Philips that Funai have not made the necessary arrangements to ensure its completion. As a result, Philips will start arbitration proceedings in the International Court of Arbitration (ICC) and will terminate the agreement signed in January.
Philips Chief Executive Officer Frans van Houten said: “We regret that we have to take this action, but we do so to protect our business and the interests of all our stakeholders.
“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.”
WOOX Innovations currently has 2,000 employees worldwide and annual sales of USD 1.5 billion. The subsidiary has said will continue to build on its Fidelio range of audio products. The company will also further develop marketing communications, including its ‘Obsessed With Sound’ and ‘You Need To Hear This’ campaigns.
“It’s our mission to deliver meaningful innovation in connected entertainment. From great sound quality, to advanced technology and sophisticated design, we strive to improve the entertainment experience,” said Wiebo Vaartjes, CEO of WOOX Innovations. “Thanks to the talent and commitment of our employees, retail partners and suppliers, and our unparalleled ability to move quickly to capture emerging consumer trends, we’re looking confidently towards the future.”