Swedish vendor Ericsson announced it has entered into a share purchase agreement to acquire Nortel Network’s 50% plus one share majority shareholding in LG-Nortel, the JV of LG Electronics and Nortel Networks, for US$242m.
The deal is subject to…
Swedish vendor Ericsson announced it has entered into a share purchase agreement to acquire Nortel Network’s 50% plus one share majority shareholding in LG-Nortel, the JV of LG Electronics and Nortel Networks, for US$242m.
The deal is subject to regulatory approvals and follows Nortel entering Chapter 11 bankruptcy protection in January 2009. Nortel has now sold off most of its assets.
Ericsson states that the acquisition will significantly expand its footprint in the Korean market and provide it with a well established sales channel and strong R&D capability in the country. The vendor adds that the deal will provide it with an industrial base and the ability to build new customer relationships.
The JV includes contacts with Korean operators such as KT, LG Telecom and SK Telecom. Following deal closure, the JV will become known as LG-Ericsson.
Hans Vestberg, president and CEO of Ericsson said: “Korea is one of the largest telecom markets with advanced end-user demand of new services. A strengthening of our position through the collaboration with our new partner LG Electronics will enhance our position for future technology shifts such as LTE”.
LG Electronics CEO and vice chairman Yong Nam added, “LGE is pleased to have Ericsson as a new partner in this joint venture. Ericsson will provide global industry experience and technical expertise that will benefit both customers and employees. We look forward to a fruitful future collaboration.”
The LG-Nortel JV was established in 2005 through the contribution by LG Electronics of its telecommunications systems business and by Nortel of its Korean distribution business. The focus of the venture was to develop and market large scale telecoms systems such as WCDMA, CDMA and LTE for telecom service providers in Korea as well as enterprise products and services. For 2009, the JV generated approximately US$650m of sales and had 1,300 employees.
Following deal closure, the JV will continue to be headquartered in Seoul, Republic of Korea.
SEB Enskilda is acting as Ericsson’s sole financial advisor on the transaction.
Nortel is advised by Goldman Sachs.