Philips announces completion of sale of Set-Top Boxes and Connectivity Solutions businesses to Pace Micro Technology of the UK

AMSTERDAM, The Netherlands — Royal Philips Electronics (AEX: PHI, NYSE: PHG) today announced it has completed the sale of its Set-Top Boxes (STB) and Connectivity Solutions (CS) businesses, which were part of its Home Networks business unit within its Consumer Lifestyle sector, to U.K.-based technology provider Pace Micro Technology (FTSE: PIC).

Philips received 64.5 million Pace shares, representing a 21.6% shareholding, with an approximate current market value of EUR 75 million. In addition, Philips will receive a total cash payment of EUR 5 million in the coming three years. The transaction will result in a gain of approximately EUR 55 million to be booked in the results of Philips’ Consumer Lifestyle sector in the second quarter of 2008.

Generating revenues of EUR 416 million in 2007, the STB and CS businesses together employ approximately 320 people, predominantly in France, who will transfer to Pace as part of the transaction. The transaction combines the strengths of two leading players in the industry, creating one of the largest set-top-box players in the world at a time when the shift from analog to digital TV is rapidly increasing.