Sony
Corporation (“Sony”) and Telefonaktiebolaget LM Ericsson (“Ericsson”)
today announced that Sony will acquire Ericsson’s 50 percent stake in
Sony Ericsson Mobile Communications AB (“Sony Ericsson”), making the
mobile handset business a wholly-owned subsidiary of Sony.
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.
As part of the transaction, Ericsson will receive a cash consideration of EUR 1.05 billion.
During
the past ten 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.
This means that 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.
“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. 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,” said Sir Howard Stringer, Sony’s Chairman, Chief Executive
Officer and President. Mr. Stringer also noted that 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.”
“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.
When
Sony Ericsson started its operations on October 1, 2001, it combined
the unprofitable handset operations from Ericsson and Sony. Following a
successful turnaround the company has become a market leader in the
development of feature phones by integrating Sony’s strong consumer
products knowledge and Ericsson’s telecommunications technology
leadership. The WalkmanTM phone and Cyber-shotTM phone are well known examples.
With
the successful introduction of the P1 in 2007, Sony Ericsson early on
established itself in the smartphone segment. More recently, the company
has successfully 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 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 EUR 1.5 billion of profit and paid dividends
totaling approximately EUR 1.9 billion to its parent companies.
Prominent models include ”XperiaTM arc” and “XperiaTM mini” which received 2011 EISA Awards, while recent notable additions to the lineup include “XperiaTM PLAY” and “XperiaTM arc S”.
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. The
resulting impact of the acquisition to Sony's consolidated results for
the fiscal year ending on March 31, 2012 is currently being evaluated.