The tech company will be acquiring about 15% of the handset maker after agreeing to a debt-to-equity conversion agreement worth about $76 million.
Qualcomm will be taking up to a 15% stake in handset-maker Pantech after agreeing to absorb more than $76 million in debt.
The deal is a debt-to-equity agreement that impacts both Pantech and Pantech & Curitel Communications. Qualcomm will be a passive investor with no participation in the management of the companies, or their boards of directors. Qualcomm said it will be contributing support with components, software, and technology. This could potentially lead to devices that have strong integration with Qualcomm's Brew platform.
The companies said deal should help Pantech expand its market share in South Korea and in other markets. The equity exchange will take place over a number of months, and there would be unspecified closing conditions.
"Qualcomm is committed to supporting its valued customers as well as the overall wireless industry in Korea and worldwide," said Dr. Cha Young Koo, senior VP and president of Qualcomm Korea, in a statement. "This conversion will create a stronger platform on which Pantech can continue to build its prior successes in developing unique and innovative products."
Pantech is the third-largest handset maker in Korea behind global giants Samsung and LG Electronics. Despite the global recession that has taken a bite out of the mobile phone industry, Pantech has been able to record eight consecutive quarters of profitability.
The company produces multiple mid-level cell phones and feature phones for the likes of AT&T and Verizon Wireless. Pantech said it will soon also launch smartphones for the two largest mobile operators in the United States, as well as a slate of messaging phones.
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