Thomson, the Paris-based global electronics company that sells appliances under the RCA brand in the United States, announced it will combine its television and DVD businesses with those of TCL International Holdings of China to form what would become the world’s biggest maker of TV sets.
The combined companies will make 18 million sets a year and generate annual revenue of $3 billion. Thomson will own 33 percent of the combined company, to be known as TCL-Thomson Electronics, and TCL will own the remaining 67 percent. Thomson will have the option to exchange its shares within 18 months for an undisclosed stake in TCL International, which would then own all of TCL-Thomson Electronics.
The deal is another move by a major manufacturer to shore up a faltering, increasingly unprofitable consumer electronics business. Sony recently announced an end to its CRT manufacturing business in Japan and a joint venture with Samsung to make flat panel TV displays. In the first half of this year, Thomson’s consumer products—including television sets and DVD players—had a net loss of $92.7 million.
Charles Dehelly, who took over as Thomson’s chief executive a year ago, recently announced 1,200 job cuts in the United States, closing factories in Indiana and Ohio. Like Sony, Thomson will shift much of its mainstream manufacturing to China.
For TCL, the second-largest television maker in China after the Sichuan Changhong Electric Company, the deal would provide a entry into global markets, particularly Europe and the United States. TCL is based in Guangdong Province in China. Li Dongsheng, chairman of TCL, said the deal “fulfills our objective of being one of the top five players in multimedia electronics devices in the global marketplace.”
The deal also gives TCL a major foothold in the United States, where Thomson has about 18 percent of the market for television sets. The combined company would use the RCA brand in North America, the TCL brand in Asia and Thomson in Europe.
The deal is tantamount to Thomson’s exit from television manufacturing for all but the most advanced models. Coming only a week after Sony’s exit from the core TV set business that helped it become of the world’s largest electronics manufacturers in the 1960s, the moves represent a historic shift in the consumer electronics business.
To offset the loss of TV receiver manufacturing, Dehelly has been pushing Thomson into new services and technologies, such television broadcast and professional editing equipment, and media asset management services.
For more information visit www.thomson.com.
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