Ericsson has today entered into a share purchase agreement to acquire Nortel’s majority shareholding (50%+1 share) in LG-Nortel, the joint venture of LG Electronics and Nortel Networks. The transaction is subject to customary regulatory approvals.
The new entity will be known as LG-Ericsson and remains headquartered in Seoul, Republic of Korea. The purchase price is $242 million on a cash and debt free basis and there are no plans to reduce the company’s 1300 strong workforce. LG-Ericsson aims to become one of the major global converged voice & data manufacturers leveraging on its international distributors local knowledge and channel management. In 2009, LG-Nortel generated approximately USD 650 million of sales.
This acquisition will significantly expand Ericsson’s footprint in the Korean market and provide Ericsson with a well established sales channel and strong R&D capability in the country.
“LGE is pleased to have Ericsson as a new partner in this joint venture,” said Yong Nam, Vice Chairman and CEO of LG Electronics. “Ericsson will provide global industry experience and technical expertise that will benefit both customers and employees. We look forward to a fruitful future collaboration.”
“LG-Ericsson is expected to provide the Korean market with leading technology and customer supports in cooperation with Ericsson’s Global Leadership in Telecommunication market. We are excited by the new perspective for our company.” said Jae Ryung Lee, CEO of LG-Nortel.
“Today’s announcement is good news for all concerned and is greeted with huge optimism. We remain wholly committed to working with the joint venture and although it is very unlikely that this news will have any material impact on our Resellers in the short-term, it is likely to have very positive benefits in the long-term.” Commented Gordon Smythe, Managing Director of the Joint Venture’s UK Distributor, Capstan Communications Limited.