Sony to end the joint venture of Sony Ericsson with a 1.05 billion Euro buyout

The joint venture of Sony Ericsson has come to a close, with Sony buying and gaining complete control of Ericsson’s mobile operations for 1.05 billion Euros. The takeover is expected to be finalized in January 2012.

In a press release issued on Thursday, Sony Corporation announced it will buy the 50 percent stake of Ericsson, effectively ending the partnership between the Japanese consumer electronics company and the Swedish telecommunications company. The partnership held for 10 years.

According to Sony, the move is to improve user experiences by tightly integrating mobile products with existing company’s services, including the PlayStation Network and Sony Entertainment Network.

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

Hans Vestberg, the President and CEO of Ericsson, said the acquisition is a “logical step” for the company, and that Ericsson will now shift its focus to a “global wireless market as a whole”, not just mobile phones.

The takeover is also said to include the intellectual property cross-licensing agreement covering all products and services of Sony, including the ownership of five essential patent families relating to wireless handset technology.

The joint venture had been in financial struggles for the past years, mainly inflicted by the competing Google and Apple smartphones. While the recently released third quarter results of Sony Ericsson showed an improvement over the previous quarter, the overall stats still retained a strong decline when compared against last year’s results. The company explained the poor results in the second quarter with the earthquake crisis in Japan that is said to have disrupted its supply chains.

Responding to the disappointing Q3 results, Bert Nordberg, President and CEO of Sony Ericsson, previously had stated that smartphone sales account for more than 80 percent of sales, and that the plan is to move Sony Ericsson’s entire portfolio to smartphones in 2012. It is yet unclear how this strategy will change when Sony completes the takeover.

Before the joint venture between Sony and Ericsson was formed in 2001, both companies were experiencing troubles in the mobile telephone markets. With the merger, Sony was to bring its experience in consumer product design, while Ericsson was to contribute with its vast knowledge and resources in mobile telecommunications equipment production.

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