Monday, October 24, 2005

Ericsson to Acquire Marconi

Ericsson will acquire most of Marconi for approximately £1.2 billion (US$2 billion). The deal, which continues the trend of consolidation in the industry, gives Ericsson access to a more comprehensive
portfolio of solutions, an expanded R&D capability, and strategically important customer accounts worldwide.

The acquisition includes:

  • Marconi's optical networking business

  • Marconi's broadband and fixed radio access network business

  • Marconi's softswitch business

  • Marconi's data networking equipment and services businesses

  • Marconi's relevant telecommunications services activities

  • the Marconi trademark, associated brand names and IPR

Not included in the sale are Marconi's headquarters and certain businesses in UK and Germany, and Marconi's UK pension plan.

These assets represent about 75% of Marconi's turnover. Ericsson said the deal will contribute positively to EPS from 2007, and will have a neutral effect in 2006.

What then remains of Marconi will be renamed telent plc and will focus on providing services to telecommunications and enterprise customers. The new telent plc will be Ericsson's preferred services partner in the UK.

Carl-Henric Svanberg, President and CEO of Ericsson, said: "The
acquisition of the Marconi businesses has a compelling strategic
logic and is a robust financial case. As fixed and mobile services
converge, our customers will substantially benefit from this powerful combination."

The companies expect to close the transaction by the end of January 2006.
  • In April 2005, BT selected vendors for its 21st Century Network. Marconi, which had been a traditional supplier to BT, failed to capture any of the major contracts. In recent years, Marconi had generated about a quarter of its business from BT.

    BT selected Ericsson as the sole supplier for the I-node domain of 21CN, essentially the intelligence that controls the services.