Philips Electronics NV, the huge Dutch electronics group, announced over the weekend that it has canceled its talks with Price Waterhouse management consultants over their interest in acquiring 20% of Origin BV, PhilipsÆ fast expanding IT services subsidiary. The two parties apparently failed to agree on a price. Talks began back in October, stemming from a continuing alliance between Philips and Price Waterhouse on implementation projects for Enterprise Resource Planning and other large third party software packages. Philips said that this alliance would be ongoing and unaffected by the failed talks. Origin was formed in January 1996 from the merger of BSO/Origin and Philips Communications and Processing, its in house systems integrator. It now employs 15,500 staff with revenues last year of $1.5bn, up 21%. But only 25% of this arises outside of Europe, and the link with US-based Price Waterhouse was intended to help open up the US market to Origin, a market currently dominated by the big US players. For PW, the deal would have boosted its European efforts and expanded its third party software expertise where it lags rivals like Andersen Worldwide. The failure of talks will be a big disappointment to Philips, which needs to turn this loss making 88.8% subsidiary into a leaner, profitable outfit before it can consider alternative courses of action such as a flotation.
