NOV. 11, 1991

Digital Equipment completes acquisition of Philips Electronics unit

GENEVA, Switzerland, -- Digital Equipment Corp. announced Monday it will hire 7,000 employees under terms of its acquistion agreement of Philips Electronics N.V.'s computer business.

Terms for the agreement were not disclosed but analysts familiar with the talks said the price was expected to be about $300 million.

Under the agreement, Maynard, Mass.-based Digital Equipement said it formed a company called Digital Equipment Enterprise to manage its business with small and medium-sized customers in Europe.

Digital also said it will transfer 7,000 employees from Philips to the newly formed company to strengthen its thrust into the $17 billion market in Europe.

The other part of the organization, the established Digital subsidiary, is set up to handle large accounts and very complex information technology projects, Digital said.

Hank Bodt, a member of Philips' Group Management Committee, said that he was glad that talks with Digital had been concluded successfully.

'We are convinced thatthe longer term interests of both our customers and our employees are better served with this deal. It also allows us to focus our efforts on the personal computer activities in the information technology market.'

'With these steps, Digital has moved confidently into a leading position in the banking IT sector and at the same time moved purposefully into the fast developing small and medium enterprise and desktop services part of the IT market,' said Pier Carlo Falotti, president and chief executive officer of Digital Europe.

'For a banking customer Digital can now offer a much wider choice of solutions and expertise. For a small or medium-sized company, Digital will now deliver products and multivendor desktop services from a dedicated organization, geared to their particular needs.'

Falotti said 'the advantage of Digital Equipment Enterprise is that it will operate with none of the constraints of a company set up to handle large, complex projects, but with access to that competence and expertise from its sister organisation.'

Included in the acquisition is the full range of Philips retail banking software applications, hardware products, and services, covering image and document processing, financial transaction printers, cash dispensers, and self-service information terminals.

'The banking industry sector is already a significant investment area for Digital,' explained Per-Olof Loof, Digital's director of service industries business in Europe.

'Digital is currently working with more than 2,000 banks worldwide, has systems operating in 90 percent of the world's automated exchanges, and has installed tens of thousands of trading seats.'

'We have built a solid foundation for our business in banking, and we intend to increase our participation in this sector, particularly in retail banking,' Loof added.

Digital said that by the end of November, it will have established Digital Equipment Enterprise companies in the United Kingdom, Germany, France, Spain, Austria, Switzerland, Netherlands, Belgium, and Italy with Scandinavia to follow.

The process of integrating skills and products into these new companies across Europe is expected to be completed within the next 12 months.

In each country, Digital's overall marketing strategy will be overseen by an advisory board comprised of senior managers from both the existing subsidiary and the local DEE company.

Philips and Digital also reconfirmed their agreement to explore other possibilities for cooperation in such areas as document processing, imaging, personal computers, components, CD-I and other multimedia applications, Digital said.