SHENZHEN, CHINA, 3 DECEMBER 2010 - Swedish telecommunication giant Ericsson is set to acquire certain assets of the Guangdong Nortel Telecommunication Equipment Company.
Ericsson notes that this strategic move to acquire a leading research, development and manufacturing company based in China secures continued development of its CDMA and GSM businesses in China.
US$50 million purchase
The US$50 million transaction is subject to customary regulatory approvals and other conditions. According to Ericsson, the purchase is structured as an asset sale and also subject to final balance sheet adjustments.
As per the agreement, the transaction also includes R&D facilities, manufacturing facilities as well as support and customer service in China.
GDNT was founded in 1995 as a joint venture between Canadian Telecommunications Company Nortel and local Chinese corporations and telecom operators. GDNT is now an important supplier to Ericsson following the acquisitions of the CDMA and GSM businesses of Nortel.
Acquisitions bring changes in organisations and over the coming months, about 1,100 employees, including 550 R&D engineers will be integrated into the Ericsson group.
Increase in earnings
SEB Enskilda, a provider of investment banking and broking services, is acting as Ericsson's sole financial advisor in the transaction. Ericsson expects this transaction to have a positive effect on its earnings within a year after closing.
Commenting on the acquisition, Mats H. Olsson, president of Ericsson China & North East Asia, said the acquisition greatly complements its existing R&D, manufacturing and services capabilities in the region.
H Olsson noted that it will allow the company to provide even better support to its customers across the region who are serving one of the largest GSM and CDMA subscriber bases in the world.
"We are very happy to welcome this key competence into Ericsson's newest business unit," said Rima Qureshi, head of Ericsson's CDMA Mobile Systems unit. "We have built a strong foundation with the CDMA & GSM teams acquired from Nortel. With these new assets, we take control of our business by acquiring capabilities for the continued development of the CDMA & GSM businesses."
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