Royal Philips Electronics (PHG) and China Electronics Corporation have signed a definitive agreement to transfer Philips' remaining Mobile Phone activities to CEC.

CEC will take over the responsibility for Philips' Mobile Phones business, which had 2006 sales of approximately EU320 million and has approximately 240 employees, mainly in Asia Pacific and Eastern Europe.

The "Xenium" brand, which is associated with long-battery life, will be transferred to CEC under the terms of the agreement. CEC will receive an exclusive license to market and sell mobile phones under the Philips brand for the coming five years. Certain mobile phone-related patents will be transferred and licensed to CEC.

In addition, Philips will transfer to CEC its existing marketing network in some key countries for the mobile phone business, as well as its 25% equity stake in Shenzhen Sangfei Consumer Communications Coompany.

This transaction is conditional on all required shareholder, government and regulatory approvals and consents and is expected to be closed by the end of the first quarter 2007.