Philips, LG Electronics in Venture

AMSTERDAM, Netherlands (AP) â€” Philips Electronics NV and South Korea's LG Electronics Co. plan to merge their cathode ray tube businesses into new joint venture aimed at becoming the world's

Monday, November 27th 2000, 12:00 am

By: News On 6

AMSTERDAM, Netherlands (AP) â€” Philips Electronics NV and South Korea's LG Electronics Co. plan to merge their cathode ray tube businesses into new joint venture aimed at becoming the world's leading supplier of the television and computer monitor components.

At a news conference in Amsterdam, Philips said Monday it is also in late-stage talks with LG to combine their mobile-phone handset businesses. They gave no details of what such a combination might involve, but said they were not exclusive negotiations.

Philips said it will pay $1.1 billion for a 50 percent stake in the cathode ray tube venture, which aims to incorporate both companies' global operations in that area by mid-2001. LG will own the rest.

``With expected annual sales of $6 billion and approximately 36,000 employees, the new company will ensure a global leadership position,'' the Dutch company said in a statement.

Philips Chief Operating Officer Gerard Kleisterlee said the company is also considering investing up to $500 million in LG's preferred stock.

Kleisterlee said he expects cost savings of between $200 million and $300 million within two years of the start of the cathode ray tube joint venture. Philips also expects that it will immediately boost its earnings per share.

Philips' existing cathode ray tube business generated earnings before interest and tax of $157 million in 1999, while those of LG reported $357 million in the same period.

Philips employs 24,000 people in its cathode ray activities while LG employs 12,000.