Japan-based Funai Electric Co Ltd has filed an arbitration claim asking for damages over the failed deal with Royal Philips for the acquisition of the Amsterdam-based firm's Lifestyle Entertainment unit. Funai Electric makes and sells television sets, DVDs and computer peripherals while Royal Philips makes domestic appliances, medical systems, lighting and consumer electronics. It also produces health and wellness products and peripherals, among others.
Talks with Funai for the purchase of its Lifestyle Entertainment business were halted by Philips in October. Philips then initiated the arbitration process, claiming that Funai breached the contract and that it was the reason why the disposal valued at EUR 150 million or USD 205 million failed.
In a statement today, Funai countered the claim and said Philips did not separate the business in time. The Osaka-based firm said the deadline for completing the deal was pulled back two times. The firm added that Philips did not also give a clear description of the asset.
Funai said, "Although Funai was continuing with negotiations to complete the transaction based on its good business relationship of mutual trust with Philips for over 25 years, Philips suddenly and unilaterally broke off negotiations and filed a petition for arbitration. Due to these and other actions attributable to Philips, Funai is confident that Philips is in breach of its agreement with Funai."
According to a Bloomberg report, the quarrel between the two firms is a blow to the efforts of Philips Chief Executive Officer Frans van Houten to phase out their audio and video offerings. Philips is now looking for a new buyer for the business which manufactures audio, video, multimedia and accessories. The firm still continues to operate as a stand-alone firm under the WOOX Innovations brand. It is based in Hong Kong and has sales of EUR 1.2 billion, Bloomberg reported.
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