Ericsson has reached an agreement to acquire mobile, broadband and enterprise communications firm Telcordia for $1.15 billion cash from its private equity owners Providence Equity Partners, LLC and Warburg Pincus. Approximately 2, 600 of Telcordia’s employees will join Ericsson.
Telcordia generated $739 million in revenues in the fiscal year ended Jan. 31, 2011, and Ericsson expects the deal will increase its earnings per share within 12 months of closing. Ericsson said it anticipates to close in the fourth quarter of 2011 and for the deal to take full effect in the first quarter of 2012. The deal is still subject to customary regulatory approval.
Ericsson views the deal as a way to enhance its position in the growing OSS/BSS market, which it said is driven by the demand for business efficiency, innovation and high-quality user experience. The company said the $35 billion market for software and system integration is expected to grow at an annual growth rate of 6 to 8 percent between 2010 and 2013.
“”The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced, ” said Ericsson President and CEO Hans Vestberg. “In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multivendor product portfolio.”
“The combination of Ericsson’s global leadership position and Telcordia’s long-standing expertise in solving the most complex communications challenges will benefit customers through new services and expanded capabilities, ” said Mark Greenquist, Telcordia president and CEO.
