Sony Officially Completes Ericsson Takeover

In October 2011, Sony bought the 50% stake in its Sony Ericsson joint venture for €1.05 billion. The Japanese entertainment giant has finally completed the deal to buy partner Ericsson, reports Reuters. The company will now be named as Sony Mobile Communications and is entirely a property of Sony Entertainment Company.

Ericsson, the Swedish company has confirmed that Sony has paid out the $1.29 billion (€1.05 billion) amount to complete the deal that was originally set in October last year, when Sony purchased 50% stake of the joint venture.

The full announcement came as:

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.

In the last quarter, Sony Ericsson failed to reach the estimates and posted one of its pathetic earnings with a loss of about $317 million. Sony itself posted a quarter with massive loss of $2.1 billion in last quarter. Although, a big part of loss was associated with environmental disasters, the company also experienced a decline in its television sales.

Sony now owns the partner Ericsson and aiming to integrate its mobile company into its electronics divisions. This merger will certainly help Sony to strengthen its smartphones into rich product lineup. Sony is already producing tablets, TVs and PCs. The company also owned five essential patent families related to wireless handset technology.

The Japanese entertainment giant also planning to drop Ericsson moniker from Sony Ericsson name with an aim to produce devices with its own brand name, which is expected to appear during the Mobile World Congress event scheduled for late February.

Perhaps, Sony is getting serious to regain its lost status in the market. This year we have seen two major changes at Sony camp, including the appointment of Kazuo Hirai as its new President and CEO and not the purchase of its partner Ericsson.

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