Royal Philips Electronics and LG Electronics announced they have signed a definitive agreement to merge the two companies' cathode ray tube (CRT) businesses into a new joint venture company.
The companies plan an official presentation of the joint venture in Hong Kong on July 5.
Under the terms of the agreement, LG and Philips will share equal control of the joint venture. The new company will be legally established in the Netherlands, with operational headquarters in Hong Kong. Philippe Combes, currently CEO of Philips Display Components, will lead the joint venture.
The 50-50 joint venture in display technology concerns all CRT activities including glass and key components.
The company, which is targeting "a global leadership position in CRT manufacturing," is expected to have annual sales of nearly $6 billion and approximately 36,000 employees.
In explaining the decision, the companies cited "complementary strengths and synergy potential." As examples, they listed "Philips' leadership in television tubes, and LG's leadership in monitor tubes; LG's geographical leadership in Asia, and Philips' strength in Europe, China and the Americas; and LG's industrial and manufacturing expertise and Philips' global marketing and technological innovation."
Additionally, the joint venture will bring further benefits in purchasing as well as research and development.