GENEVA and STOCKHOLM, Sweden, Aug. 20 /PRNewswire-FirstCall/ --
STMicroelectronics (NYSE: STM) and Ericsson (Nasdaq: ERIC) today announced an
agreement to merge Ericsson Mobile Platforms and ST-NXP Wireless into a joint
venture. The 50/50 joint venture will have the industry's strongest product
offering in semiconductors and platforms for mobile applications and will be
an important supplier to Nokia, Samsung, Sony Ericsson, LG and Sharp. The
fabless joint venture will employ almost 8,000 people with pro-forma 2007
sales of USD 3.6B. ST is expected to exercise its option to buy NXP's 20
percent of ST-NXP Wireless before the closing of this transaction.
In the joint venture, ST contributes its industry-leading multimedia and
connectivity solutions as well as a complete world-class 2G/EDGE platform and
strong 3G offering, including customer relationships with Nokia, Samsung, and
Sony Ericsson. Ericsson contributes its industry-leading 3G and LTE platform
technology as well as customer relationships with Sony Ericsson, LG and Sharp.
The joint venture, staffed by proven professionals across all functional
areas, is designed for long-term stability in its original structure, and is
set to become an industry leader in product research, as well as design,
development, and the creation of cutting-edge mobile platforms and wireless
semiconductors.
In a business where scale matters, the complementary product portfolios
contributed by the parent companies will deliver significant scale and
synergies by leveraging and expanding the existing strategic cooperation
between Ericsson Mobile Platforms and ST-NXP Wireless.
"By combining the complementary strengths and product offerings of
Ericsson and ST in platforms and semiconductors the joint venture is well
positioned to become a world leader," said Carl-Henric Svanberg, President and
CEO of Ericsson. "The industry continues to develop at a swift pace and
customers see benefits from our broad offering. This partnership is a perfect
fit and secures a complete offering, as well as the necessary scale for
technology leadership."
"ST is taking another bold step. By combining two industry-leading
operations, we will create a world leader in mobile platforms and
semiconductor solutions with even stronger capabilities to create customer
value and continue to deliver rapid innovation," said Carlo Bozotti, President
and CEO of ST. "In April, we announced a plan to join wireless resources with
NXP to strengthen our wireless business and enhance our leadership position in
a sector which we have targeted for strong organic and external growth and
substantial expansion of financial returns. Now, we've expanded our ambitions
and will be even better positioned to meet our opportunities."
Frans van Houten, CEO of NXP, said: "We understand the desire of ST to
call our 20 percent stake in order to expand the ST-NXP Wireless joint venture
with Ericsson. We support this next step that Ericsson and ST are taking to
create the global leader in wireless semiconductors. To help ensure the
success of the joint venture going forward all NXP's supply and support
agreements will continue as planned. The additional proceeds of the 20 percent
stake will enable NXP to further build leadership positions through innovation
and investment in NXP's core businesses."
The joint venture's top-tier and broad customer base will also benefit
from a tighter relationship that follows from the success of the existing
cooperation between ST and Ericsson. The businesses being combined are major
suppliers to four of the industry's top five handset manufacturers, who
together represent almost 80 percent of handset shipments, as well as to other
exciting industry leaders.
The joint venture will rely on its complete platform offering, which will
include modems, multimedia and connectivity solutions for 2G/EDGE, 3G, HSPA
and LTE technologies. It will also include all appropriate hardware, software
and support to enable handset manufacturers to develop mass-market products.
Ericsson Mobile Platforms has state-of-the-art mobile modem design and mobile
terminal architecture expertise and ST-NXP Wireless brings vast experience in
wireless semiconductor development, including an industry-leading ASIC, ASSP,
Application Processor and connectivity portfolio and hardware assembly and
testing.
The business in the 50/50 joint venture will be led by a development and
marketing company with approximately 7,000 people employed. This company will
be consolidated by ST and Ericsson will account for it using the equity
method. A separate platform design company, with approximately 1,000 people
employed, will provide platform designs to the development and marketing
company. Ericsson will consolidate this company and ST will account for it
using the equity method. Of the almost 8,000 people employed, almost 5,000
will be from ST-NXP Wireless and roughly 3,000 will be from Ericsson Mobile
Platforms. The new company will be fabless and will use silicon technologies
and manufacturing capabilities from ST and other external providers.
The joint venture will be headquartered in Geneva, Switzerland and
governance will be balanced. Each parent will appoint four directors to the
board and Ericsson will designate Carl-Henric Svanberg as the Chairman of the
Board while ST will appoint Carlo Bozotti as the Vice Chairman. In addition,
ST will designate the Chief Executive Officer and Ericsson will appoint the
Executive Vice President to the company. An integration management team, led
by Alain Dutheil, has already been selected.
The joint venture will acquire relevant assets from the parent companies.
After these acquisitions the joint venture will have a cash position of about
USD 0.4B. Ericsson will contribute USD 1.1B net to the joint venture, out of
which USD 0.7B will be paid by the joint venture to ST. The joint venture is
subject to ordinary regulatory approvals.
As ST-NXP Wireless was launched as an 80-20 venture between
STMicroelectronics and NXP, ST will acquire the remaining shares under the
terms already agreed with NXP. The value of the 20 percent stake will be a
function of the last twelve months (LTM) performance of the ST-NXP Wireless
joint venture at the exercise of the call, which is expected to take place
before the closing of the transaction between ST and Ericsson.
On September 1, 2001, Ericsson formed Ericsson Mobile Platforms to offer
2.5G and 3G platforms to manufacturers of mobile phones and other wireless
devices, based on Ericsson's global standardization leadership and the world's
strongest intellectual property rights portfolio for 2.5G and 3G mobile phone
systems. The rationale for the new company was the transformation of the
handset industry where few companies would be able to deliver chip-sets, but
many to deliver handsets. Ericsson Mobile Platforms is the supplier of 3G and
HSPA platforms to Sony Ericsson, LG and Sharp. The unit is headquartered in
Lund, Sweden and is a part of Business Unit Multimedia within the Ericsson
Group.
ST-NXP Wireless began operations on August 2 and the new entity is a
global provider of platform solutions and ICs for wireless communications,
offering leading-edge capabilities in 2G, 2.5G (GPRS), 2.75G (EDGE), 3G, LTE,
multimedia, and connectivity. Nearly three-quarters of the company's sales are
in product categories in which ST-NXP Wireless is the market leader and its
strong position in TD-SCDMA established the new company with a solid
foundation in the rapidly growing China market. The joint venture has been
created from successful businesses that generated USD 3B in revenue in 2007
and which has produced thousands of important communication and multimedia
patents.
SEB Enskilda is acting as Ericsson's sole financial advisor in the
transaction while Morgan Stanley and UBS are acting as financial advisors,
respectively, to ST and its Supervisory Board.
Notes to editors:
Carlo Bozotti, President and CEO of STMicroelectronics and Carl-Henric
Svanberg, President and CEO of Ericsson, will hold a joint conference for
media and analysts in London at 12.00 noon UK time, 1.00 pm CET, to comment on
today's announcement. The press conference will be webcast and available at
www.ericsson.com/press and on ST's website at http://investors.st.com.
An analysts, investors and media conference call will begin at 3.00pm UK
time, 4.00 pm CET.
Ericsson is the world's leading provider of technology and services to
telecom operators. The market leader in 2G and 3G mobile technologies,
Ericsson supplies communications services and manages networks that serve more
than 195 million subscribers. The company's portfolio comprises mobile and
fixed network infrastructure, and broadband and multimedia solutions for
operators, enterprises and developers. The Sony Ericsson joint venture
provides consumers with feature-rich personal mobile devices.
Ericsson is advancing its vision of "communication for all" through
innovation, technology and sustainable business solutions. Working in 175
countries, more than 70,000 employees generated revenue of USD 27.9 billion
(SEK 188 billion) in 2007. Founded in 1876 and headquartered in Stockholm,
Sweden, Ericsson is listed on OMX Nordic Exchange Stockholm and NASDAQ.
STMicroelectronics is a global leader in developing and delivering
semiconductor solutions across the spectrum of microelectronics applications.
An unrivalled combination of silicon and system expertise, manufacturing
strength, Intellectual Property (IP) portfolio and strategic partners
positions the Company at the forefront of System-on-Chip (SoC) technology and
its products play a key role in enabling today's convergence markets. The
Company's shares are traded on the New York Stock Exchange, on Euronext Paris
and on the Milan Stock Exchange. In 2007, the Company's net revenues were
$10 billion. Further information on ST can be found at www.st.com
Disclosure Pursuant to the Swedish Securities Markets Act
Ericsson discloses the information provided herein pursuant to the
Securities Markets Act. The information was submitted for publication at 08.00
CET, on August 20, 2008.
Safe Harbor Statement
Some of the statements contained in this release that are not historical
facts are statements of future expectations and other forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933 or
Section 21E of the Securities Exchange Act of 1934, each as amended) based on
management's current views and assumptions. Such forward-looking statements
are subject to various risks and uncertainties, which may cause actual results
and performance of our business to differ materially and adversely from the
forward-looking statements. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this release. We
do not intend, and do not assume any obligation, to update any information or
forward-looking statements set forth in this release to reflect subsequent
events or circumstances.
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