Sony Buys Out Ericsson

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BY Adam E. John

Sony will acquire Ericsson’s 50 per cent stake in Sony Ericsson Mobile Communications, making the mobile handset business a wholly-owned subsidiary of Sony. As part of the transaction, Ericsson will receive a cash consideration of EUR 1.05 billion.

The transaction gives Sony 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. The transaction 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.

With the introduction of the P1 in 2007, Sony Ericsson early on established itself in the smartphone segment. More recently, the company has made the transition from feature phones to Android-based Xperia smartphones. By the end of the third quarter of 2011, Sony Ericsson held a market share of 11 per cent (by value) in the Android phone market, representing 80 per cent of the company’s third quarter sales. During its ten years in operation Sony Ericsson has generated approximately EUR 1.5 billion of profit and paid dividends totaling approximately EUR 1.9 billion to its parent companies.

The transaction, which has been approved by appropriate decision-making bodies of both companies, is expected to close in January 2012, subject to customary closing conditions, including regulatory approvals.

As a result of obtaining full control of Sony Ericsson, Sony will consolidate Sony Ericsson from the closing date of the acquisition.

Sony will acquire Ericsson’s 50 per cent stake in Sony Ericsson Mobile Communications, making the mobile handset business a wholly-owned subsidiary of Sony. As part of the transaction, Ericsson will receive a cash consideration of EUR 1.05 billion.

The transaction gives Sony 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. The transaction 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.

With the introduction of the P1 in 2007, Sony Ericsson early on established itself in the smartphone segment. More recently, the company has made the transition from feature phones to Android-based Xperia smartphones. By the end of the third quarter of 2011, Sony Ericsson held a market share of 11 per cent (by value) in the Android phone market, representing 80 per cent of the company’s third quarter sales. During its ten years in operation Sony Ericsson has generated approximately EUR 1.5 billion of profit and paid dividends totaling approximately EUR 1.9 billion to its parent companies.

The transaction, which has been approved by appropriate decision-making bodies of both companies, is expected to close in January 2012, subject to customary closing conditions, including regulatory approvals.

As a result of obtaining full control of Sony Ericsson, Sony will consolidate Sony Ericsson from the closing date of the acquisition.

(Adam E. John is consulting editor with techtaffy.com. He can be reached at [email protected])