Ericsson offer to buy LHSSwedish telecommunications company L.M. Ericsson Telephone Co. said Tuesday that through a wholly owned subsidiary, it has announced a voluntary public cash offer to acquire billing and customer care software and services company LHS AG for EUR22.5 in cash per share, valuing the company at about EUR310 millionEricsson said the cash offer represents a premium of 33% to the LHS one month average share price until June 4 of EUR16.9. With the acquisition Ericsson strengthens its leading offering in revenue management with a fully integrated convergent charging and billing solution and expands its customer base, it said.
Ericsson said it has agreed to acquire 55.1% of the registered share capital and has entered into irrevocable undertakings to secure 20.0% of the shares.
In total Ericsson has secured 75.1% of the registered share capital, it said.
Carl-Henric Svanberg, president and chief executive of Ericsson, said:”Operators are quickly moving towards convergent charging and billing solutions to enhance their relationship with consumers, improve cost efficiency and limit financial risk. Ericsson and LHS form a strong constellation of prepaid and postpaid solutions ready to immediately capture this opportunity. Ericsson’s leadership in real-time charging and mediation, together with the leading billing and customer care solutions of LHS, make the two companies a leading player in revenue management and strengthen our overall multimedia offering.”
Ericsson said the multimedia market is quickly evolving and converging: industries, such as telecom, media and internet; technologies and payment options.
It said operators are adapting in order to leverage the opportunities modern networks enable and on consumers’ growing demand for new services, in a cost-efficient manner. End-to-end revenue management solutions must be able to handle convergent technologies including IP-based broadband services, a variety of business models and partner relationships, as well as be payment-option agnostic.
Ericsson said LHS employs about 550 people and said its sales in 2006 amounted to EUR71.6 million.
Ericsson said the transaction is expected to be accretive from 2008 onwards, excluding possible depreciation of acquired intangibles.
The acquisition will be conducted by means of a public voluntary cash offer to the LHS shareholders, valuing the share capital at EUR316 million, excluding treasury shares.
Enterprise value for LHS is EUR310 million after adjusting for options of EUR16.1 million and the net cash position of EUR22.2 million.
The company said the cash offer is subject to the satisfaction of all necessary approvals and clearances from competition authorities have been obtained.
It said an offer document regarding the cash offer will be published upon approval of the German Federal Financial Supervisory Authority, or BaFin.
The publication, at which time also the offer period begins, is expected to occur in one month’s time. Completion of the cash offer is expected in the third quarter, 2007.
ABN AMRO acts as its sole financial advisor in the transaction, Ericsson said.
