LM Ericsson Telephone Company (ERIC) will acquire 100% of the shares of US based Telcordia from private equity firms Providence Equity Partners and LLC and Warburg Pincus, for $1.15 billion.
Telcordia is a developer of mobile, broadband and enterprise software and services.
The acquisition will enable Ericsson to expand its presence in operations support systems (OSS) and business support systems (BSS) market by leveraging Telcordia’s position within the OSS/BSS and portfolio of software.
OSS and BSS monetize traffic, offerings and products that operators sell, which help them in increasing efficiency of the business amid growth in broadband traffic, connected devices, services and applications.
Management stated that Telcordia fits in perfectly with Ericsson’s global presence, services capabilities and knowledge of networks. In addition to 2,600 employees Ericsson will gain North American business of Telcordia. Consequently, Ericsson will emerge as a leader in real-time charging and capabilities supporting operators end to end.
The company anticipates that the acquisition will be completed in the fourth quarter of 2011. For fiscal year end January 31, 2011, Telcordia generated revenues of $739 million. The transaction is expected to increase Ericsson’s earnings per share within 12 months after closing.
Headquartered in Stockholm, Sweden, Ericsson is a multinational company engaged in manufacturing and selling wireless infrastructure equipment to the telecom sector. It is a total network solutions provider, serving wireless and wireline operators, enterprises and consumers.
The company is primarily a supplier of global system for mobile communications (GSM)-based equipment, and looks to benefit from the next generation systems as more broadband content is flowing into mobile devices, prompting network providers to upgrade their networks. Alcatel-Lucent (ALU) is a major competitor of Ericsson.
We currently maintain our Neutral recommendation on Ericsson, with a Zacks #3 Rank (Hold recommendation) over the next one to three months.
ALCATEL ADS (ALU): Free Stock Analysis Report
Be the first to comment