Siemens has confirmed that is has sold its handset business to BenQ. The deal will make BenQ the fourth largest handset manufacturer in the world, with combined annual revenues of $10 billion.
BenQ will acquire Siemens’ entire mobile devices business including all assets and liabilities of the business. Under the agreement, Siemens will become a shareholder in BenQ Corporation by purchasing EUR50 million in newly issued BenQ shares and providing funds totaling approximately EUR50 million to support the future of the business. Additionally, BenQ will serve as Siemens’ preferred partner for end-to-end mobile communication solutions.
As part of the transaction, BenQ Corporation will gain the right to use the Siemens trademark for mobile phones for a period of 18 months from closing and co-branding rights to BenQ-Siemens for a period of 5 years from closing.
The immediate priority for the merged company, which will be headquartered in Munich, will be to stop the Siemens unit bleeding huge daily losses. In February 2005 Siemens bosses admitted the division was losing around a million Euro a day. They also admitted they had missed the boat on 3G phones, and had a lot of catching up to do.
Of their four trailed options for the business, a sale was perhaps always the most likely, given those circumstances but still a relatively healthy consumer brand perception.
Certainly K Y Lee, BenQ chairman and ceo, said the acquisition was a positive move for his company.
“The acquisition of Siemens’ mobile handset business allows us to bring the strengths of both companies together, enhancing our efforts to bring mobile handsets that reflect today’s digital convergence.”
BenQ is hoping that Siemens will give it a means to enter the European and Latin American markets, where it is most likely to keep the Siemens brand visible. It has also agreed to keep Siemens’ manufacturing bases going at full capacity for three years but it seems inevitable that given the need to strip cost out of the business, it will retrench operations back to China, where operating costs are so much lower in the medium term.
