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Sony to take over Sony Ericsson for EUR 1.05 billion

Sony and Ericsson have announced today that Sony will acquire Ericsson’s 50 percent stake in Sony Ericsson Mobile Communications AB, making the mobile handset business a wholly-owned subsidiary of Sony.

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 part of the deal, Ericsson will receive a cash consideration of EUR 1.05 billion. It also provides Sony with a broad IP cross-licensing agreement and ownership of five essential patent families.

Facts about Sony Ericsson:

  • Sales (FY 2010)- EUR 6,294 million
  • Net income (FY 2010)- EUR 90 million
  • Number of employees- 7,500
  • Headquarters- London
  • R&D sites-  Beijing, Lund, Silicon Valley and Tokyo
  • Market share- 11% in Android (FY2011/3Q), 80 % of sales are Android smartphones

“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. 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” said Hans Vestberg, President and CEO of Ericsson.

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.

Ericsson has accounted for its 50 percent share in Sony Ericsson according to the equity method. Following completion of the transaction, Ericsson will have no outstanding guarantees relating to Sony Ericsson and will no longer account for Sony Ericsson as an investment on balance sheet. The transaction will result in a positive capital gain for Ericsson which will be defined after closing of the transaction.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy