Money Matters - Simplified

Sony to buy Ericsson's share in Sony Ericsson

The deal is expected to close in January 2012.

Sony Corp. is buying out Telefon AB LM Ericsson's 50 percent stake in their joint venture Sony Ericsson for €1.05 billion, or about $1.46 billion, in a bid to integrate smartphones into its consumer electronics portfolio.

The deal, which will make Sony Ericsson a wholly-owned subsidiary of Sony, also awards Sony five essential wireless handset technology “patent families” and a broad intellectual property cross-licensing agreement.

In a statement, Ericsson said that synergies from having both a technology and telecoms services portfolio and a handset operation were falling, and that the buyout by Sony was a logical step.

“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” -- Sony CEO Howard Stringer

Sony Ericsson was founded in 2001, combining unprofitable handset operations from the two companies. The mobile handset company went on to enjoy success in feature phones with its offerings of Walkman music handsets and Cybershot camera phones.

Competing in smartphone market
However, the company has struggled to compete with Apple and Samsung in the smartphone market.

Sony’s Chairman and Chief Executive Howard Stringer said, “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.”

“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,” Stringer added.

Sony's offerings of laptops, games, PlayStation, tablets, etc. have been kept apart from Sony Ericsson's handsets until now.

There had been speculation that such a deal would take place to remove the barriers to integration.

The deal is expected to close in January 2012.

The Tokyo-based Sony and the Stockholm-based Ericsson said they will continue to work together under a wireless connectivity initiative to drive connectivity across multiple platforms.