Ericsson, STMicroelectronics Complete Transaction to Split Up ST-Ericsson

Ericsson and STMicroelectronics announced the closing of the transaction for the split up of ST-Ericsson. This follows the announcement the companies made on March 18, 2013 on the chosen strategic option for the future of the joint venture.

Effective Aug. 2, 2013 Ericsson has taken on the design, development and sales of the LTE multimode thin modem solutions, including 2G, 3G and 4G interoperability. In total, approximately 1,800 employees and contractors have joined Ericsson.
ST has taken on the existing ST-Ericsson products, other than LTE multimode thin modems, and the GNSS (Global Navigation Satellite System) connectivity solution sold to a third party, and related business as well as certain assembly and test facilities. In total, approximately 1,000 employees have joined STMicroelectronics.

The close down of the remaining parts of ST-Ericsson has started and both parents are assuming equal funding of the wind-down activities.

“We welcome the team of about 1,800 modem-experts that join Ericsson,” Douglas Gilstrap, senior vice president and chief strategist at Ericsson, said. “Ericsson continues to see great value in the LTE multimode thin modems as they are an important part of our vision of 50 billion connected devices in a Networked Society. The market potential is there and Ericsson will now focus on bringing the best modems to market, and work closely with customers to integrate them into their products.”

“We have finalized the agreement fully on track to our plan, with minimized social impact and lower exit costs than anticipated,” Georges Penalver, executive vice president, chief strategy officer at ST, said. “We welcome our new employees as we are adding strong competencies in the areas of embedded processing, RF, analog and power technologies, as well as in software and complex system integration, to fuel growth in many of our product areas where we have significant business opportunities.”

As communicated in the second quarter 2013 earnings press release, ST estimates that its total cash costs net of proceeds from beginning 2013 through the end of the joint venture, including the covering of ST-Ericsson’s ongoing operations during the transition period and the restructuring costs related to the exit from the joint venture, will be in the range of approximately $300 million to $350 million.