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Electronics Production |

Wavecom buys unit from Sony Ericsson

Wavecom will acquire certain assets of Sony Ericsson's M2M Communications Business Unit in a cash transaction that will be valued up to a maximum of €32.5 million.

Wavecom SA, a producer of embedded wireless communications platforms for automotive, industrial (machine-to-machine) and mobile professional applications and Sony Ericsson Mobile Communications AB, announced today 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 a maximum of €32.5 million. The transaction is subject to customary closing conditions and is expected to close near the end of March 2006. Commenting on the transaction, Ron Black, Wavecom CEO, 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." Wavecom and Sony Ericsson have signed an agreement in which Sony Ericsson would sell its M2M Communications Business Unit, which specializes in automotive and industrial wireless solutions, to Wavecom. The 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 & development, marketing, and sales. The transaction does not include, however, any assets or activities related to Sony Ericsson's mobile phones, accessories, or PC card business, which will remain a part of 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. Black added, "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." Sony Ericsson's M2M Communication Business Unit is headquartered in Research Triangle Park, North Carolina, USA, and also has offices in Europe and Asia. It is expected that over 90 employees will join Wavecom with the acquisition. Anders Franzén, Sony Ericsson's Corporate Vice President and Head of the M2M Communications Business Unit, will join Wavecom as VP and Chief Operations Officer, responsible for research and development, manufacturing, supply chain, program management, and quality. Franzén commented, "I am extremely excited to be part of this industry-defining event. The combination of these two organizations represents a coming of age of the M2M space. It brings together Wavecom's software expertise and Sony Ericsson's hardware platform and market presence. Our existing and new customers will have the opportunity to fully capitalize on the unique advantages offered by the combined business." Robin Duke-Woolley, industry analyst from Harbor Research Inc. agreed with Black and Franzén, noting "this acquisition is a particularly significant event for the rapidly-developing M2M sector as it brings together two energetic market developers into one larger, specialist unit. We recognize Wavecom as a key innovator in this space and this bold move will considerably strengthen its credentials on every level. By initiating this degree of consolidation, we believe Wavecom will gain a distinct competitive advantage in its delivery of added-value software and hardware solutions in key M2M segments, including automotive, fleet management, automatic meter management, alarm systems, point of sale and wireless local loop phones." The Sony Ericsson M2M Communications Business Unit grew substantially during the period from 2003 to 2005 and in 2005 it generated revenues of approximately €65 million and gross margins of approximately 20% but operated at a loss. This acquisition is expected to put pressure on Wavecom's short-term profitability while in the long-term should enhance shareholder value. As the management team is still refining the organization, expectations on the expense structure and potential restructuring costs are not available at this time. Jefferies Broadview acted as exclusive financial adviser to Wavecom in this transaction.

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March 15 2024 2:25 pm V22.4.5-2
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