Ericsson divests in mobile phone joint venture with Sony

STOCKHOLM (AP) — LM Ericsson AB will sell its 50 percent stake in mobile phone maker Sony Ericsson to Sony Corp. for euro1.05 billion ($1.46 billion) in cash, the Swedish wireless equipment firm said yesterday.

Ericsson said Sony Ericsson will become a wholly owned subsidiary of Sony and integrated into Sony’s broad platform of network-connected consumer electronics products.

The transaction is subject to customary closing conditions, including regulatory approvals, but has been approved by appropriate decision-making bodies of both companies.

Ericsson said the transaction gives Sony an opportunity to rapidly integrate smartphones into its portfolio of network-connected consumer electronics device, such as tablets, televisions and personal computers.

Sony CEO, Sir Howard Stringer, said the acquisition will afford Sony operational efficiencies in engineering, network development and marketing.

“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,” Stringer said.

The deal will also provide Sony with an intellectual property cross-licensing agreement, covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology.

Helena Nordman-Knutson, an analyst with Ohman Fondkommission in Stockholm, said the deal was expected and Ericsson received a good price for its stake.

“Sony Ericsson has no strategic value for Ericsson anymore,” Knutson said.

She added the licensing agreement will be positive for both Ericsson and Sony.

Shares in Ericsson rose by 5.4 percent to 70.3 kroner ($10.7) when the Stockholm stock exchange opened, while Sony stock climbed 5.4 percent to 1.65 yen ($21.7) in Tokyo.

Ericsson said the shift in the mobile market, from simple mobile phones to smartphones that include access to Internet services and content, means the synergies for the company in having both a telecoms services portfolio and a handset operation have decreased.

The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace, the company said in a statement.

“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,” said Ericsson CEO Hans Vestberg.

Ericsson said it will now focus on the global wireless market as a whole and how wireless connectivity can benefit people, business and society beyond just phones.

Ericsson and Sony will also set up a wireless connectivity initiative aimed at driving and developing the market’s adoption of connectivity across multiple platforms, they said.

The agreement is expected to close in January 2012.