Ericsson acquires Nortel’s wireless assets for $1.13bn
Monday, July 27th, 2009
In a statement released on July 25th, Ericsson announced it will acquire the parts of Nortel’s Carrier Network Division in North America. The purchase is expected to expand Ericsson’s presense in region and to strengthen the company’s ability to serve leading wireless operators like Verizon, Sprint, US Cellular, Bell Canada and Leap especially in the evolution to LTE. Carl-Henric Svanberg, President & CEO of Ericsson said: “Acquiring Nortel’s North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE. Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focused on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America. This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America”.
Nortel’s CDMA operations generated $2bln in 2008 from a good product mix with a significant amount of services. The healthy financial profile of the acquired operations will have a positive effect on Ericsson’s earnings. Magnus Mandersson, recently appointed President of Ericsson CDMA Operations said: “Our two companies share a long-standing commitment to technological excellence and innovation, and we look forward to welcoming the Nortel employees into Ericsson. We are truly impressed with their continuing outstanding performance during these challenging times”. President of Carrier Networks at Nortel, Richard Lowe, added: “The agreement with Ericsson provides a strong and stable future for Nortel’s CDMA and LTE business. Customers will enjoy continued strong support from an industry leader as they look to evolve to LTE. Many employees will also have the opportunity to continue their work with Ericsson, bringing their innovation power and creativity to the wireless industry for years to come”.
The purchase is structured as an asset sale at a cash purchase price of $1.13bln on a cash & debt free basis. The transaction is subject to the US and Canadian court and customary regulatory approvals. Ericsson has appointed SEB Enskilda as their sole financial advisor in the transation.