BenQ Purchase Siemens Mobile Phone Division

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Taiwanese technology group BenQ has agreed to take over Siemens' ailing mobile-phones unit, drawing a line under hundreds of millions of euros of losses for the German engineering giant. The deal, announced on Tuesday, will cost Siemens 350 million euros ($430 million) in losses before tax in sweeteners, transfer costs and writedowns, and will catapult much-smaller BenQ from relative obscurity into the world's top 10 mobile handset vendors.

In return, Siemens will acquire a 2.5-percent stake in fast-growing BenQ, Taiwan's top maker of computer equipment and mobile phones, via 50 million euros worth of new BenQ shares. Siemens shares closed 2.3 percent higher at 62.60 euros, the second-biggest gainer on Germany's blue-chip DAX index, which was up 1.5 percent.

The German company will invest 250 million euros in the struggling business before handing it over to BenQ and will write down 100 million euros worth of products that are to be discontinued, Kleinfeld told a news conference in Munich.

The 350 million-euro total will appear in Siemens' profit and loss account before the end of the fiscal year to end-September, Siemens said, adding on an analysts' call that it foresaw no further restructuring charges. The deal is expected to close in the September quarter if approved by BenQ shareholders and competition regulators.

The unit -- Siemens' only remaining consumer business in a portfolio that stretches from turbines to trams -- brought in 5 billion euros of sales of Siemens' total of 75 billion last fiscal year, but made an operating loss of 152 million euros.

Siemens said it had given no guarantees to compensate BenQ if the business failed. BenQ said it expected the merged mobile-phones unit to break even in 2006, and raised its forecast for handset sales this year by 50 percent to 15 million units. New, BenQ-Siemens branded handsets will be launched in the fourth quarter.

BenQ said the deal would help it to become the world's fourth-biggest mobile-phone vendor -- a position occupied by Siemens until last year. It has since been overtaken by LG Electronics and Sony Ericsson. The Taiwanese company, which also makes consumer-electronics products such as cameras and scanners, will gain instant access to Siemens' strong market positions in Europe and Latin America, to complement its strength in Asia, and to new technology.

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