Swedish telecom equipment manufacturer Ericsson Thursday said Sony Corp would acquire its stake in their joint venture — Sony Ericsson Mobile Communications — for Euro 1.05 billion ($1.47 billion) making the mobile handset business a wholly-owned subsidiary of the Japanese electronic giant.
“The transaction gives us an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices including tablets, televisions and personal computers for the benefit of consumers and the growth of its business,” Sony said in a joint statement issued here.
“It also provides Sony with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology,” it added.
The deal which is expected to close by January 2012 is subject to regulatory approvals. It will result in a positive capital gain for Ericsson which will be defined after the transaction is closed.
“Ten years ago when we formed the joint venture, thereby combining Sony’s consumer products knowledge with Ericsson’s telecommunication technology expertise, it was a perfect match to drive the development of feature phones,” said Hans Vestberg, president and chief executive officer, Ericsson.
“Today we take an equally logical step as Sony acquires our stake in Sony Ericsson and makes it a part of its broad range of consumer devices. We will now enhance our focus on enabling connectivity for all devices, using our R&D; and industry leading patent portfolio to realize a truly connected world,” he added.
The mobile market has rapidly shifted focus from simple mobile phones to high-end smartphones during the last ten years.
By the end of the third quarter of 2011, Sony Ericsson held a market share of 11 percent (by value) in the Android phone market, representing 80 percent of the company’s third quarter sales.
During its ten years in operation Sony Ericsson has generated approximately Euro 1.5 billion of profit and paid dividends totalling approximately Euro 1.9 billion to its parent companies.
“With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-licence agreement, our four-screen strategy is in place,” said Howard Stringer, Sony’s chairman, chief executive officer and president.
“We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment. This includes Sony’s own acclaimed network services, like the PlayStation Network and Sony Entertainment Network,” he added.