Ericsson Pays $1.13 Billion To Win Nortel Assets At Auction

Ericsson (NSDQ: ERIC), the largest wireless infrastructure company in the world, has agreed to pay $1.13 billion in cash to acquire parts of the Nortel’s carrier networks, to make it a potential powerhouse in North America.
The purchase will not only gain it important CDMA contracts with Verizon (NYSE: VZ), Sprint (NYSE: S), U.S. Cellular, Bell Canada and Leap Wireless, but will buy it important expertise in the fourth-generation technology, called LTE. Earlier this month, Ericsson beefed up its U.S. presence by signing a $5 billion contract with Sprint Nextel, to manage the company’s network for it on a daily basis. Ericsson already had North America annual sales of $2.7 billion. Nortel’s operations will add about $2 billion. Ericsson will have 14,000 North American employees.
Ericsson was somewhat of an unexpected winner given that Nokia Siemens Networks’ agreed to acquire the assets on June 20 for $650 million. At that time, Nortel decided to pursue an auction, in which other companies, such as Research In Motion were considered likely bidders. Ericsson’s purchase is subject to court and customary regulatory approvals.