Ericsson to acquire Redback for USD 2.1 billion
Ericsson has agreed to acquire Redback Networks for USD 2.1 billion cash. Ericsson will pay USD 25 per share, a premium of 60 percent on Redback’s share price over the last 90 days. The total price is USD 1.9 billion, net of Redback’s cash position. The move is expected to strengthen Ericsson’s portfolio of IP networking equipment, with Redback having a strong position in multi-service edge routing technology. The California-based company has over 700 operator customers in 80 countries and employs 800 people. Its sales for the first nine months of 2006 were up 87 percent to USD 197 million. Redback will become a subsidiary of Ericsson and maintain its offices. Ericsson expects the deal to add to its earnings from 2008, assuming the takeover closes by end-February 2007. Holders of 22 percent of Redback shares have already committed to the offer.
