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Ericsson to acquire Nortel's North American GSM business for USD70m
(Nordic Business Report Via Acquire Media NewsEdge) 25 November 2009 - Swedish telecoms equipment maker Ericsson AB (STO: ERIC B) said today that it was chosen to buy the North American GSM business of Canadian sector player Nortel Networks Corp (OTC: NRTLQ) for USD70m on a cash-and-debt-free basis.
The deal covers certain assets of Nortel's Carrier Networks division, Ericsson said.
Ericsson made its offer together with Austrian sector company Kapsch CarrierCom AG, part of the Kapsch Group. Kapsch will acquire most of Nortel's remaining assets outside North America for USD33m.
Nortel has been under bankruptcy protection since January.
The transaction follows the completion of the auction process initiated by Nortel and is subject to receiving approval by the US and Canadian Bankruptcy Courts and to satisfying regulatory and other conditions.
Ericsson expects that the purchase will have a positive impact on its earnings within a year after it closes the deal.
Via the move, the Swedish company will add some 350 new employees.
The agreement includes GSM contracts with North American operators such as US telecoms operator AT& T (NYSE: T) and T-Mobile, local subsidiary of Deutsche Telekom AG (ETR: DTE). It also covers acquisition of an installed GSM base.
In 2008, Nortel's North American GSM operations generated sales of some USD400m and Ericsson's North American business had sales of SEK17.9m, mainly from GSM and WCDMA equipment and associated services.
Including the recent acquisition of Nortel's CDMA and LTE assets, and the seven-year agreement for wireless and landline network services between Ericsson and Sprint Nextel (NYSE: S), North America will now become the largest region within the Swedish company with 14,500 employees.
(EUR1 = USD1.5, EUR1 = SEK10.3)
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(c) 2009 M2 COMMUNICATIONS
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