agreed to pay $2.1 billion for parts of
Stockholm-based Ericsson said the deal would boost its position in the "accelerating transmission segment" and expand its platform for next-generation converging networks. The company said it will acquire operations with annual sales of $1.8 billion that will be neutral to earnings next year and accretive in 2007.
Ericsson will acquire Marconi's optical networking, broadband and fixed radio access network, softswitch, data networking equipment and services businesses and relevant telecommunications services activities.
"The acquisition of the Marconi businesses has a compelling strategic logic and is a robust financial case," Ericsson chief Carl-Henric Svanberg said. "As fixed and mobile services converge, our customers will substantially benefit from this powerful combination."
"Mobile and fixed broadband access is quickly growing throughout the world," Ericsson said. "Ericsson is leading the build out of mobile broadband and has a strong position also in the new wireline technology. The upgrade to broadband will lead to a massive increase in data traffic. As a consequence, transmission capacity in telecom networks will have to be dramatically increased.
"Marconi's competitive transmission offerings, especially in optical systems, will combine with Ericsson's strong microwave radio position and worldwide sales organization to create a solid foundation for growth," Ericsson said.
On Tuesday, Ericsson rose 72 cents to $33.64.