Thomson Multimedia To Acquire Majority Interest In Philips Professional Broadcast

5-Dec-00

Royal Philips Electronics of the Netherlands and Thomson Multimedia of France have reached a preliminary agreement for the purchase by Thomson of five businesses of the Philips Professional Broadcast group, through a new holding company established by Philips. Under the preliminary agreement, Thomson will immediately acquire 67 percent of a new holding company comprising the five businesses. Philips will have the right to sell its remaining 33 percent stake in the holding company to Thomson in two equal portions on 1 January, 2002 and 1 January, 2003, respectively. Thomson Multimedia will have the right to call for Philips' remaining 33 percent stake in one or two exercises at its election at any time. The first step of this transaction, which remains subject to regulatory and labor relations approvals, is expected to be completed in the first quarter of 2001. Financial details will not be disclosed. The businesses - Cameras, Film Imaging, Signal Processing, Media Networking & Control and Systems - had a combined turnover of approximately Euro 250 million in 1999, and have a total workforce of 1050 employees. The Philips Professional Broadcast group is currently an activity within the Specialty Products cluster of Philips Consumer Electronics. The proposed transaction fits with Philips' strategy to streamline its product portfolio around core competencies. Philips, via its Digital Networks business, will continue to focus on consumer product solutions and enabling technologies for the broadcasting market. The Digital Transmission Systems and SMATV businesses of Philips are not included in this transaction. For Thomson Multimedia, this contemplated acquisition fits with its recently announced Digital Multimedia Solutions (DMS) strategy and will complement its existing professional broadcast activities, with a leading worldwide position and the intention of creating a strong worldwide leader for the broadcast hardware market. This ensures both customers and employees of ongoing continuity and commitment to this business. The proposed transaction will strengthen Thomson's DMS division, a new business segment focused on business-to-business solutions for broadcasters, content providers, network operators and advertisers aiming at deploying full digital video content solutions. It occurs after the recent creation of Nextream (a joint venture between Thomson and Alcatel), dedicated to the high growth Interactive Video Networks market. Thomson Multimedia intends to eventually combine its own professional broadcast activities with the businesses acquired from Philips. Together they represent a total turnover estimated at Euro 366 million of sales in 1999, achieving leading positions for the advanced broadcast market. This business addresses the immediate and future needs of the video content providers and the broadcast industry, thanks to a unique worldwide sales and system integration network present in more than 20 countries. The customer portfolio comprises major broadcasters and networks, multichannel operators, transmission and distribution operators together with production and post production facilities. The business also seeks to exploit growth opportunities including the rapid migration by the broadcast industry to server-based network architectures, and the creation of integrated digital solutions, all creating a powerful end-to-end offering. Tom Verbeek, CEO of Philips Specialty Products said, ""Thomson Multimedia is acquiring a unique cluster of businesses which are top players in their respective markets. All benefit from strong synergies and bring unprecedented competitive advantages to the group as a whole."" With its remaining broadcast related activities - principally Digital Networks - Philips will focus on enabling broadcasters to deliver exciting new content via digital delivery platforms. In particular, Philips will concentrate on the potential of convergence in the home, with the set-top box developing into a home gateway combining broadcast and Internet applications. Thierry Breton, Chairman and Chief Executive Officer of Thomson Multimedia said, ""These businesses fit perfectly with our Digital Media Solutions initiative. The advent of digital broadcasting and video over the Internet will soon require for content providers, broadcasters and network operators deployment of new end-to-end capability from the studio to the consumer devices. Complementing Thomson's professional broadcasting solutions and Nextream Interactive Video Networks business, this move represents another step for serving this very promising market."" For the latest about Royal Philips Electronics, visit www.news.philips.com. For more information about Thomson Multimedia, visit www.thomson-multimedia.com.

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