Sony will pay Ericsson about $1.5 billion for its stake in the company, which makes a wide range of smartphones with some Google Android handsets among its offering.
The move will make Sony Ericsson a "wholly-owned subsidiary of Sony and integrated into Sony's broad platform of network-connected consumer electronics products," the companies said in a statement on the deal, which has been rumored for months.
Sony's connected products include desktop and laptop PCs, tablets, TVs, digital cameras, Blu-ray players and PlayStation gaming consoles, as well as online services such as the PlayStation Network or Sony Online Entertainment. The tech giant also owns the Sony Pictures film studio and record labels as well.
As a part of the deal, Sony and Ericsson will also cross-license and share in ownership of "five essential patent families "relating to wireless handset technology."
The patent segment of this deal reflects the growing concern handset makers have for growing their respective patent portfolios.
"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," said Howard Stringer, Sony's chairman, chief executive and president in a statement. "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 Ericsson was launched on Oct. 1, 2001, and at that time combined "the unprofitable handset operations from Ericsson and Sony," the two companies said. "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 Walkman phone and Cyber-shot phone are well-known examples."
But feature phones (or just regular cellphones that can do things such as store and play music, shoot photos and video but not run full-out mobile apps) are less desired nowadays than smartphones and with connectivity and online services becoming increasingly important, Sony sees an opportunity in taking over the company fully.
"Ten years ago when we formed the joint venture ... it was a perfect match to drive the development of feature phones," said Hans Vestberg, chief executive and president of Ericsson. "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."
The boards of both companies have approved the buyout deal, which is subject to regulatory approval. Sony and Ericsson said they expect the deal to close sometime in January.
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