This article was published on February 16, 2012

Sony completes Ericsson buyout to form Sony Mobile Communications


Sony completes Ericsson buyout to form Sony Mobile Communications

Sony has completed the deal to buy partner Ericsson out of the companies’ joint Sony Ericsson mobile venture, according to confirmation posted to Reuters. The company will now be named Sony Mobile Communications and owned wholly by the Japanese entertainment giant.

Swedish firm Ericsson has confirmed that Sony has paid the $1.29 billion (EUR 1.05 billion) price, that was originally set in October, to purchase its 50 percent share of the organisation.

Here’s the announcement in full:

Ericsson (NASDAQ:ERIC) has today completed the divestment of its 50 percent stake in Sony Ericsson Mobile Communications AB (“Sony Ericsson”), including the broad IP cross-licensing agreement, jointly announced by Sony Corporation (“Sony”) and Ericsson on October 27, 2011. This makes Sony Ericsson a wholly-owned subsidiary of Sony. The agreed cash consideration for the transaction is EUR 1.05 billion.

Ericsson’s gain on the transaction will be approximately SEK 7.5 billion and will be reported in the first quarter result on April 25, 2012, as ‘Other operating income’ in the income statement.

Sony Ericsson’s last quarter was a miserable one as the firm posted a $317 million loss as it struggled to compete against its smartphone rivals, deliver on price and restructure its business following the sale. Sony itself posted an even worse $2.1 billion loss in its last quarter of business, during which it was chiefly affected by declining sales in its television business and environmental disasters.

Sony has said that it will integrate the mobile company into its electronics divisions, merging the company’s smartphones into its rich product lineup. That area of business already includes tablets, TVs and PCs, also licensing the handset maker’s patents that cover “five essential patent families relating to wireless handset technology”.

Sony is working to drop the Ericsson brand from the Sony Ericsson name, moving forward to release its own-brand devices, which is likely to start emerging during the Mobile World Congress event, which takes place later this month.

The year may be less than two months old but this news is already the second significant change at Sony this year, following Kazuo Hirai’s appointment as President and CEO last month.

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