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Ericsson Buying Redback for $2.1B
By Mark Evans | December 20, 2006
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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