Philips Electronics NV said on Monday Japan's NEC will take a 60 percent stake in Philips' Business Communications unit (PBC), which the Dutch firm had been planning to sell.

The agreement involves all of PBC's activities and businesses in Europe, the Middle East and Africa, with a total workforce of about 900 people, Philips said. The new company will be named "NEC Philips Unified Solutions". Upon completion of the transaction, NEC will hold 60% and Philips 40% of shares.

By combining NEC's strong technology base and market position in Japan and North America, with Philips' strong market presence in Europe, NEC Philips Unified Solutions plans to strengthen its position in Europe.

Philips and NEC have been cooperating closely since 2003 in a strategic partnership to jointly develop and deploy IP technology in enterprise communications.

Kazuo Tsuzuki, Associate Senior Vice President of NEC's Enterprise Solutions Operations stated: "This joint venture will strengthen NEC's global position in the telecom market and we are expecting to grow sales of UNIVERGE solutions to the global customers on top of the continued sales of the Philips portfolio. It will support NEC's growth ambition by using the strong market position of PBC in the European enterprise communications 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".

Philips said it expected the deal, which is still subject to regulatory approval, to be completed in the second quarter of 2006.