LG-Nortel becomes LG-Ericsson in $242m deal
Swedish giant gets new ties with advanced Korean market for bargain price
Published: 22 April, 2010
READ MORE: M&A | South Korea | Ericsson | LG Electronics | R&D | LTE
As expected, Ericsson has snapped up yet another relic of Nortel, its controlling stake in the LG-Nortel joint venture. The Swedish giant, which also bought the bankrupt vendor's CDMA, LTE and GSM activities last year, will pay $242m in cash for the new asset, looking to build on recent closer ties with Korea. The venture will be renamed LG-Ericsson and continue to be based in South Korean capital Seoul.
The 50% plus one share of LG-Nortel (a profitable JV which was not part of the bankruptcy protection process) is the last piece of Nortel to go, apart from much of its extensive patent portfolio, which some observers still believe will become the focus of a separate rump company.
The Swedish market leader said in a statement that its latest purchase would "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." CEO Hans Vestberg - who has ruled out any more major M&A activity this year but is looking for small acquisitions to boost key target businesses - said: "Korea is one of the largest telecom markets with advanced end user demand of new services. A strengthening of our position through the collaboration with our new partner LG Electronics will enhance our position for future technology shifts."
Last summer, Ericsson announced an initiative to work with Korean firms on an
environmental initiative aimed at green mobile communications, and was reported to be planning an LTE R&D center in the country, now likely to be based around the LG-Ericsson acquisition.
Ericsson has boosted its LTE program with a significant source of advanced technology and a useful testbed in a hugely sophisticated mobile nation, for a very small price tag. The JV had 2009 sales of $650m and numbers 1,300 employees.
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