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(Pocket-lint) - Philips has cancelled the sale of its audio, video, multimedia and accessory business to Japan's Funai Electric Co due to a breach of contract but will still seek another buyer.

Philips and Funai originally revealed in January an agreement where Funai would buy Philips's business for a cash consideration of 150 million euros including a brand licence fee. The deal was expected to close in the second half of 2013.

The audio-video business includes all home audio, headphones, speakers, in-car audio, video-related products, portable video players, home media players, and DECT phones. It also includes Philips' range of batteries, power adapters and antennas.

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Philips revealed today however that it terminated the agreement and will take legal action to recover damages caused by Funai. Philips will also seek other opportunities for the business. For now, the company will continue to run the business as usual.

“We regret that we have to take this action, but we do so to protect our business and the interests of all our stakeholders,” said Frans van Houten, chief executive officer of Philips, in a release.

As for why Philips scrapped the deal, it appears Funai has not taken the necessary steps to complete the transaction and transfer of the business. We've contacted both companies for clarification, and we'll update if more information becomes available.

Writing by Elyse Betters. Originally published on 25 October 2013.