Cash-Strapped Philips Sells Out Appliance Interests To Whirlpool
EINDHOVEN, Netherlands (AP) _ Philips, the financially troubled Dutch electronics giant, Thursday announced the sale of its remaining share in home appliance manufacturing to partner Whirpool Corp. the U.S. appliance maker.
The sellout of the profitable joint venture appeared motivated by cash- strapped Philips’ need for funds as it restructures worldwide operations.
″We believe that transferring these activities to a company that is fully dedicated to this business is the best guarantee for the long-term growth and success. The proceeds of this transaction will enable Philips to strengthen its financial position,″ said Philips President Jan Timmer in a joint statement issued by Philips and Whirlpool.
The sale of Philips’s remaining 47 percent stake completes the transfer of its entire appliance operation to Whirlpool, a process begun in 1988.
At that time, Philips and Whirlpool announced that the two companies would set up a joint venture in which Whirlpool bought a 53 percent interest in Philips’s appliance division.
Michigan-based Whirlpool will pay approximately 1.2 billion guilders or about $600 million for the 47 percent stake, Philips spokesman Ben Geerts said, and is expected to complete the acquisition by July 31.
Analysts reacted favorably to the sellout news.
″Other companies have sold off what can be considered crown jewels, but as long the price is right, it is not a problem,″ said Rob Sweers, head of institutional investment for Banque Paribas in Amsterdam.
Philips lost 4.24 billion guilders in 1990, largely due to a one-time charge of 4.65 billion guilders the company took to finance the restructuring.
In addition, Philips carries debts total 17 billion guilders.
″Our intention to lead the globalization of the major home appliance is well known, and this expansion of our presence in Europe is a key part of the strategy,″ David R. Whitwam, Whirlpool president and chief executive officer said in the statement with Timmer.
Whitwam also predicted that Whirlpool would ″move forward with an aggressive plan to strengthen our European position.″