Ericsson to Acquire Key Assets of Marconi’s Telecommunications Business
Ericsson has reached an agreement with Marconi Corp. plc to acquire the parts of the company’s telecommunications business that are strategically important to Ericsson. Ericsson will acquire assets representing about 75 percent of Marconi’s turnover and will pay approximately £1.2 B in cash on completion, subject to certain closing adjustments. The acquisition will add roughly £1 B in sales and is expected to have a neutral effect on Ericsson’s EPS in 2006 with positive contribution from 2007.
The businesses to be acquired can be divided into two main business types, Network Equipment and Network Services. The former covers the design and supply of communications systems that transmit and switch voice, data and video traffic, including optical networking, broadband access, data networks, microwave radio and next generation switching. The businesses within Marconi’s Network Equipment that will be acquired had a turnover of approximately £0.7 B in the financial year ended March 2005.
Network Services covers a broad range of support services to telecommunications operators and other providers of communication networks, including installation, commissioning and maintenance, and value-added services. The businesses within Marconi’s Network Services that will be acquired had a turnover of approximately £0.3 B in the financial year ended March 2005.
The acquisition requires approval from Marconi’s shareholders and clearance from the relevant competition and other regulatory authorities, including the European Commission. At the time of going to press the Board of Marconi intends to recommend that Marconi shareholders vote in favour of the transaction at an extraordinary general meeting. Subject to receipt of the necessary approvals, the transaction is expected to be completed at year-end 2005.