BenQ takes over Siemens' phone unit

InnoHippo SG

http://www.rcrnews.com/news.cms?newsId=22939

BenQ takes over Siemens' phone unit
By Mike Dano

Jun 7, 2005
After months of speculation, Siemens announced Taiwanese electronics manufacturer BenQ Group will take over its ailing mobile-phone business. Siemens will pay BenQ $307 million for "ongoing support" and will buy a 2-percent stake in BenQ for $61 million.
BenQ, which makes phones, digital cameras, scanners and LCD screens, will acquire Siemens' entire mobile-phone business along with its 6,000 employees, as well as rights to the Siemens' brand for five years. The deal includes Siemens' development and manufacturing locations in Manaus, Brazil, and Kamp-Lintfort, Germany, and its headquarters in Munich, Germany. The business will remain headquartered in Munich-one of Siemens' main stipulations.

BenQ also scores access to Siemens' factory in Shanghai, China, for three years. Siemens operates the factory through its previously announced joint venture with Chinese handset vendor Ningbo Bird.

The deal is expected to close in the fourth quarter of Siemens' fiscal year.

"With this partnership, we have found a sustainable perspective for our mobile-phones business," said Klaus Kleinfeld, Siemens' chief executive officer. "BenQ and Siemens complement one another ideally. We will be uniting our strengths with BenQ's highly successful consumer business. In addition, we also complement one another perfectly in terms of geography. This will give BenQ, which up until now has been very strong in Asia, access to the European and Latin American markets where we hold leading positions."

BenQ sold 500,000 branded phones in the first quarter, according to research and consulting firm Strategy Analytics. The company also builds phones for other handset makers. Siemens sold 9.3 million phones in the first quarter. A combined Siemens and BenQ commanded a 5.7-percent market share in the first quarter, according to Strategy Analytics, behind No. 4 LG Electronics Co. Ltd. and just ahead of Sony Ericsson Mobile Communications L.P.

The deal is notable for Siemens in that the company can finally shed its failing mobile-phone business. Siemens has been publicly seeking buyers or partners for months. For BenQ, the deal gives the upstart access to Siemens' carrier agreements and distribution channels outside of Asia. BenQ is one of a number of smaller Asian players looking to break into the worldwide mobile-phone market. Nokia Corp., Motorola Inc. and Samsung Electronics Co. Ltd. command the vast majority of the worldwide handset business; their combined market share totals more than 60 percent of the industry.