Sony Ericsson May Buy Spice Mobile

Sony Ericsson is in talks to acquire the Indian handset manufacturer Spice Mobile, according to a report from The Economic Times.

Spice Mobile, which is part of the multifaceted Spice Corp., made its entry into the Indian market two years ago. The company mainly offers entry-level cell phones, and has seen rapid growth.

BK Modi group controls 64% of Spice Mobile, and it is reportedly looking to sell its stake for about $174 million, or nearly three times the current market value. Officials from Sony Ericsson and Spice Mobile could not be reached for comment.

The report said that the deal has not been finalized, and Spice Mobile had initially approached Sony Ericsson about a collaboration and partnership before acquisition talks began.

"If Sony Ericsson were to acquire more than 50% in Spice Mobile, it will have to make an open offer as per our regulations. They want to acquire a majority stake, but it has not yet been finalized if it will be a 100% buyout," a source told the Times.

Spice Mobile said it has sales of about 200,000 handsets a month. The potential deal would make Sony Ericsson, which sells about 400,000 handsets a month in India, the second-largest handset player in the country, behind Nokia. Samsung is currently in second place, with about 450,000 handset sales a month.

Carriers and handset manufacturers are increasingly targeting the Indian market because it is widely seen as a rapidly growing market. While most of these consumers use entry-level cell phones, the market is expected to rapidly mature into a sophisticated one that utilizes mobile phones for things like mobile banking and Internet browsing.