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Nov. 2 (Bloomberg) -- Royal Philips Electronics NV will provide more than 385 million euros ($524 million) in financial backing to a new television venture with TPV Technology Ltd. after protracted negotiations to offload the unprofitable unit.
Philips will book a pretax charge of about 270 million euros in the fourth quarter, the Amsterdam-based company said in an e-mailed statement yesterday. The new company will be 70 percent owned by TPV and 30 percent by Philips. The deal is expected to close in the first quarter of 2012.
Philips is reducing the size of its consumer-electronics business, which has struggled against rising competition from Asian rivals with lower costs. The television business had a loss of 54 million euros in the third quarter.
“This agreement is important for both Philips and TPV and provides clarity to our consumers, trade partners and employees,” Philips Chief Executive Officer Frans van Houten said in the statement.
Philips, based in Amsterdam, had planned to shift the subsidiary to TPV by year-end. Maintaining that schedule became more challenging as the overall market for consumer electronics deteriorated. Amid extended and “intense” talks with TPV, Philips in October said it may have to consider alternative options for the unit.
The 385 million euros that Philips is providing includes loans and one-off advertising and promotion support; it doesn’t include additional equity funding and subordinated loans that both partners are providing to the joint venture.
--Editors: Thomas Mulier, Andrew Noel
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