Royal Philips Electronics of The Netherlands and NEC Corp. of Japan have signed a binding Memorandum of Understanding (MOU) to form a joint venture in enterprise communications, by NEC taking a majority share in Philips' Business Communications unit (PBC). The new company will be named NEC Philips Unified Solutions and the transaction is conditional upon regulatory approvals and is expected to be completed in the second quarter of 2006. Upon completion, NEC will hold 60 percent and Philips 40 percent of shares.

The agreement involves all PBC's activities and businesses in Europe, the Middle East and Africa, with a total workforce of approximately 900 people. By combining NEC's strong technology base and market position in Japan and North America, with Philips' strong market presence in Europe, the new company will be able to strengthen its position in Europe in view of the fast technology changes in the modern telecom world.

The two companies have been cooperating closely since 2003 in a strategic partnership to jointly develop and deploy IP technology in enterprise communications. Since then both parties have leveraged their expertise to successfully address new opportunities in the IP communications market, further developing customer base and channels to market.

Commenting on the agreement, Harrie Brunklaus, CEO of Philips Corporate Investments said, "The combined strengths of NEC and Philips will offer NEC Philips Unified Solutions unique opportunities in developing a powerful portfolio of solutions and services, extending market reach and share of the business communications market in Europe."