Sony buying Ericsson’s stake in Sony Ericsson

27 Oct 2011

Sony will acquire Ericsson’s 50pc stake in Sony Ericsson, making the mobile handset business a wholly-owned subsidiary of Sony, the companies have announced.

The transaction gives Sony an opportunity to rapidly integrate smartphones into its array of network-connected consumer electronics devices – including tablets, televisions and personal computers.

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 patent families relating to wireless handset technology.

As part of the transaction, Ericsson will receive a cash consideration of €1.05bn.

During the past 10 years, the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to internet services and content. The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace, the companies said.

This means the synergies for Ericsson in having both a world-leading technology and telecoms services portfolio and a handset operation are decreasing. Today, Ericsson’s focus is on the global wireless market as a whole; how wireless connectivity can benefit people, business and society beyond just phones. Consistent with that mission, by setting up a wireless connectivity initiative, Ericsson and Sony will work to drive and develop the market’s adoption of connectivity across multiple platforms.

Sony and Ericsson CEOs react to acquisition

“This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want,” said Sir Howard Stringer, Sony’s chairman, president and CEO.

“With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-license agreement, our four-screen strategy is in place. 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,” Stringer added.

Stringer also noted the acquisition will afford Sony operational efficiencies in engineering, network development and marketing, among other areas. “We can help people enjoy all our content – from movies to music and games – through our many devices, in a way no one else can.”

Hans Vestberg, president and CEO of Ericsson, said that when the Sony Ericsson joint venture was formed 10 years ago, 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,” Vestberg added. “We will now enhance our focus on enabling connectivity for all devices, using our R&D and industry-leading patent portfolio to realise a truly connected world.”

The transaction 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.