Philips to transfer its PC monitors business to TPV Technology, entering into a brand license agreement
Royal Philips Electronics (NYSE:PHG, AEX:PHI) today announced that it has reached an agreement with TPV Technology Limited. (SEHK: 903) on key terms and conditions of a brand licensing agreement under which Philips will transfer its PC monitors business, IT Displays, to TPV. This is in line with Philips’ previously communicated commitment to take decisive steps to improve the profitability levels at its Television business, of which the IT Displays unit forms part.
Under the terms of this agreement, TPV, the largest producer of PC monitors worldwide, will assume responsibility for sourcing, distribution, marketing and sales of all Philips’ IT Displays activities worldwide. As part of the intended brand licensing agreement, TPV can exclusively use the Philips brand name for PC monitors worldwide, in exchange for which Philips will receive revenue-based royalty payments. Philips IT Displays sales amounted to approximately EUR 600 million in 2007. Completion of this intended transaction, which is expected in the course of 2008, is subject to applicable regulatory approvals and the fulfillment of specific closing conditions.
The intended agreement with TPV represents a further step by Philips to fundamentally reposition itself in the digital display business and accelerates Philips’ efforts to address the unsatisfactory performance of its television business. In April of this year, Philips already announced it would transfer its consumer television operations in North America, while at the same time it said it would take steps to further optimize its global supply base in TV. Philips remains ahead-of-plan in optimizing its TV operations and will book approximately EUR 66 million in charges in the second quarter of 2008, which are largely related to these efforts.