Loss-making French handset manufacturer Sagem has been sold to venture capital firm Sofinnova at an estimated cost of €220 million to parent company Safran.
Safran has agreed to hand Sagem Mobiles to Sofinnova for an expected €220 million in handover charges and write-downs.
Safran will retain a 10 per cent stake in the new business.
Sofinnova said it will create a new mobile phone ODM company, called Sagem Wireless, to develop and market white label devices for other manufacturers and for network operators. It said it will also make phones for "fashion, sports and luxury companies".
Sagem already builds phones for Sony Ericsson, Vodafone and Orange.
Sagem Wireless will retain 310 staff, out of 690, with 70 located at its new headquarters in Cergy-Pontoise in France and 240 at its manufacturing plant in Ningbo, in China.
About 250 staff will be transferred to software development companies Esmertec and Purple Labs, in which Sofinnova already holds stakes.
Safran said other staff will be offered transfers to its aerospace and security hardware businesses.
"With this transaction, we can bolster the software companies that are leaders in this market, and also create a large-scale software R&D center at Cergy," said Sofinnova managing partner Jean Schmitt.
"Above all, this transaction creates Sagem Wireless, which has the world-class people and technologies needed to become a global leader."
Pasquale Pistorio has been appointed chairman of the board.
The agreement is subject to the approval of employee representative bodies. It is expected to complete before the end of the year.
Sagem Mobiles will continue to conduct its business until this transaction is completed, which should be by the end of 2008 at the latest.
Safran’s profits tumbled 27 percent during the first half of the year.