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Wavecom acquires Sony Ericsson's M2M Business

Posted: 28 Apr 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Wavecom? Sony Ericsson Mobile Communications? acquisition? M2M Communications Business Unit?

Wavecom SA and Sony Ericsson Mobile Communications AB announced the signing of an agreement wherein Wavecom acquires certain assets of Sony Ericsson's M2M Communications Business Unit in a cash transaction that will be valued up to around $40 million.

Specializing in automotive and industrial wireless solutions, Sony Ericsson's M2M Communications Business Unit includes the new GX64 GSM/GPRS product family, the GX47/48 GSM/GPRS product family, the CM42/52 CDMA/1xRTT product family, as well as the company's global assets and activities in M2M research and development, marketing and sales. The transaction does not include any assets or activities related to Sony Ericsson's mobile phones, accessories or PC card business, which will remain a part of Sony Ericsson.

Commenting on the transaction, Wavecom CEO Ron Black said, "This event marks the first consolidation of two major players in the wireless M2M space. It will strengthen the industry and should accelerate the adoption of industry standards which are needed to stimulate overall market growth."

According to Wavecom and Sony Ericsson, the combination of these two businesses offers numerous synergies and benefits, specifically in scale and geographic presence. Sony Ericsson will bring to Wavecom a solid customer base from the North American automotive and fleet management market that should further reinforce Wavecom's already diverse automotive customer base in Europe, said the press release.

"We are clearly thrilled about the joining of these complementary businesses. The deal will greatly expand our global presence, especially in North America, and create a development powerhouse. Going forward we will be integrating Sony Ericsson's M2Mpower software suite into our Open AT software suite, which we believe is already becoming the standard for automotive and industrial wireless solutions. Additionally, we will benefit from the expanded product portfolio and Sony Ericsson's unique hardware customization capability," added Black.

Q1 results
Yesterday, Wavecom disclosed its financial results for Q1 2006. According to the company's website, Q1 revenues were around $35 million, a decrease of 8 percent from the previous quarter. Wavecom explained that the QoQ decline resulted from no handset customer sales in this quarter, as well one of their key customers in Europe entering into a court-supervised reorganization in February 2006.

"We expect the integration process of the Sony Ericsson M2M business unit to take two to three quarters to complete. Given a number of factors, both positive and negative, that will impact the financial performance of the combined entities, the company will not be providing quantitative guidance for the remaining three quarters of 2006 at this time. Management does however expect the acquisition to be accretive in 2007," said a Wavecom statement.

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