Ericsson buys Nortel's China R&D JV

Dylan Bushell-Embling
02 Dec 2010

Ericsson will buy Nortel's R&D and services joint venture in China for $50 million.

The vendor has announced the acquisition of Guangdong Nortel Telecommunication Equipment Company (GDNT) in an all-cash transaction.

GDNT - which provides GSM and CDMA equipment and services - was founded in 1995 as a joint venture between Nortel and Chinese shareholders, including local carriers. Nortel owns 62% of the company.

Ericsson will receive all GDNT's R&D and manufacturing facilities, as well as support and customer service facilities. The deal involves the transfer to Ericsson of around 1,100 staff, half of which are R&D engineers.

Nortel chief strategy officer George Riedel said the sale is the last significant divestiture since the Canadian company entered administration in early 2009.

Ericsson has already bought Nortel's CDMA and GSM assets for $1.13 billion. Ericsson has become a key GDNT customer since this 2009 acquisition, the company said in a statement.

Ericsson expects the deal, which still requires approvals, to have a positive effect on earnings within a year of closing. Its Nasdaq shares rose 2.42% to $10.32 yesterday.

MORE ARTICLES ON: China, Ericsson, Merger and acquisition, Nortel

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