Ericsson Buying Redback for $2.1B

Anyone who was hoping Nortel would snap up Redback Networks to expand its router business is going to have to think about a new strategy after Ericsson made a $2.1-billion offer for Redback. The cash offer of $25 a share is a modest premium of 18% over Redback’s closing price yesterday, and now puts Ericsson in head-to-head competition with Cisco. “The router business was an obvious gap in their offering,” said Joergen Vrenning, a Stockholm-based fund manager at Catella Capital told Bloomberg. “It is now a pretty big player in this field too. If anyone is able to bring these products to the market, it’s Ericsson.”
Obviously, Nortel doesn’t have the cash to make an all-cash offer of this size so it’s been forced to make small deals such as the $99-million purchase of Tasman Networks about a year ago. One thing about the Ericsson-Redback deal that is interesting is how it illustrates how well Ericsson has been restructured in recent years after it struggled when the telecom boom ended.

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One Response to “Ericsson Buying Redback for $2.1B”

  1. Anonymous Says:

    alas. but hats of to both ericsson and alcatel the way they are building their business. cisco, alcatel, ericsson will be 1, 2 and 3 pretty soon.

    we got people in the 50 plus club who are leading nortel. so they don’t get the dynamics and cannot understand how to structure the business. and obviously they are hanging on for retirement.

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